Exhibit 10.10
HYDROGEN SUPPLY AGREEMENT
by and between
AIR PRODUCTS AND CHEMICALS, INC.
AND
PORT XXXXXX XXXXX COMPANY L.P.
1 AUGUST 1999
TABLE OF CONTENTS
Page
----
1. FACILITY AND UTILITY ASSETS ...................................... 1
2. TERM ............................................................. 3
3. DELIVERY AND HYDROGEN AND UTILITY SPECIFICATIONS ................. 5
4. MEASUREMENT ...................................................... 7
5. QUANTITIES ....................................................... 14
6. FEED AND FUEL SUPPLY TO THE FACILITY ............................. 21
7. PRICE ............................................................ 22
8. PRICE ADJUSTMENT ................................................. 24
9. PERFORMANCE GUARANTEE ............................................ 27
10. TERMS OF PAYMENT ................................................. 29
11. GOVERNMENT REQUIREMENTS .......................................... 30
12. TAXES ............................................................ 34
13. FORCE MAJEURE .................................................... 36
14. WARRANTY ......................................................... 38
15. LIMITATION OF LIABILITY .......................................... 38
16. BUYER'S OBLIGATIONS .............................................. 40
17. TERMINATION ...................................................... 40
18. ASSIGNMENT ....................................................... 43
(i)
TABLE OF CONTENTS
Page
19. NOTICE ........................................................... 44
20. INDEMNIFICATION .................................................. 46
21. CONFIDENTIALITY .................................................. 48
22. DISPUTE RESOLUTION ............................................... 50
23. GENERAL PROVISIONS ............................................... 51
24. REPRESENTATIONS .................................................. 54
25. DEFINITIONS ...................................................... 56
EXHIBITS
EXHIBIT A TECHNICAL DESCRIPTION
EXHIBIT B [INTENTIONALLY BLANK]
EXHIBIT C [INTENTIONALLY BLANK]
EXHIBIT D UTILITIES AND SERVICES TO BE SUPPLIED BY XXXXX
EXHIBIT E DELIVERY POINTS
EXHIBIT F FACILITY PERFORMANCE CAPABILITIES
EXHIBIT G GAS TURBINE PLANNED MAINTENANCE SCHEDULE
EXHIBIT H HYDROGEN ON-STREAM FACTOR EXAMPLE
EXHIBIT I REFINERY FUEL GAS VOLUME ADJUSTMENT
EXHIBIT J BASE FACILITY CHARGE PREPAYMENT SCHEDULE
EXHIBIT K SITE HYDROGEN BALANCE
(ii)
HYDROGEN SUPPLY AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of August 1999
(the "Effective Date") by and between AIR PRODUCTS AND CHEMICALS, INC., a
corporation organized and existing under the laws of the State of Delaware
(hereinafter called "Seller"), and PORT XXXXXX XXXXX COMPANY L.P., a limited
partnership organized and existing under the laws of the State of Delaware
(hereinafter called "Buyer").
WITNESSETH THAT:
WHEREAS, Buyer has requirements for hydrogen at its Port Xxxxxx, Texas
plant (together with all additions and modifications to such plant, the "Buyer's
Plant") and desires to purchase such requirements of hydrogen from Seller; and
WHEREAS, in order for Seller to furnish such hydrogen to Buyer, it will be
necessary for Seller to design, fabricate and install a facility for the
manufacture of hydrogen at Xxxxx'x refinery in Port Xxxxxx, Texas (the
"Facility");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, Seller agrees to sell to Buyer and Buyer agrees to purchase
from Seller such requirements of hydrogen, upon the following terms and
conditions:
1. FACILITY AND UTILITY ASSETS
1.1 Construction of the Facility. Seller shall design and construct the
Facility, which shall be generally as described in Exhibit A. Seller's
obligation to design and construct the
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Facility shall be relieved on a Day for Day (including the obligation to meet
the Start-up Date) basis in the event Xxxxx fails to meet the obligations and
milestones set forth in Exhibit D and such failure is the proximate cause of
Seller failing to meet its obligations to design and construct the Facility.
Upon completion, the Facility shall be capable of producing hydrogen meeting the
specifications set forth in Section 3.2 in the quantities of hydrogen set forth
in Article 5, in each case, when supplied with Utilities in accordance with the
Product Supply Agreement. The prices set forth herein are predicated on the
scope of supply set forth in Exhibit A.
1.2 Right to Inspect. Buyer and the Independent Engineer shall have the
right upon reasonable written notice to Seller to inspect the on-going
construction of the Facility. For these purposes, the Buyer or Independent
Engineer, as the case may be, shall have reasonable access during normal
business hours to the Facility, storage and deposit areas, sources of materials,
equipment being assembled, already assembled or in operation, equipment being
tested and to any other places or areas occupied by Seller or its subcontractors
in connection with the design and construction of the Facility. Such right of
access shall be subject to the reasonable confidentiality, safety and security
requirements of Seller and the obligation of Buyer and the Independent Engineer
to not interfere with Seller's on-going construction of the Facility.
1.3 Spare Parts. Seller shall provide and maintain an adequate inventory
of spare parts consistent with Prudent Industry Standards. Seller shall ensure
that all such spare parts are delivered prior to the Commencement Date. Any
spare parts withdrawn from the Facility for start-up shall be replaced by Seller
at its own cost.
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2. TERM
2.1 Supply Period. This Agreement shall be effective as of the Effective
Date. The initial supply term of this Agreement shall commence on the date the
Facility is installed and "ready for commercial operation" (the "Commencement
Date"), and shall continue for 246 consecutive calendar months (the "Initial
Term") provided that if Buyer begins taking hydrogen after 6 October 2000 but
before 6 December 2000, the Initial Term shall be reduced by six (6) Days for
each Day after 6 October 2000 but before 6 December 2000 that Buyer has begun
taking hydrogen. Thereafter, this Agreement shall remain in force from year to
year unless terminated in accordance with Article 17. The Initial Term, together
with any extensions, shall be referred to as the "Supply Period". Written notice
of the Commencement Date shall be furnished to Buyer by Seller. For purposes of
this Agreement, "ready for commercial operation" shall mean that hydrogen is
available for supply to Buyer from the Facility at substantially the quantities
and specifications set forth herein. Notwithstanding anything to the contrary in
this Agreement or the Letter Agreement described below, any activities or
obligations related to the Facility will be conducted under and in accordance
with the Letter Agreement dated 7 July 1998 (as amended) between Seller and
Xxxxx (including the obligation to pay termination payments and cancellation
charges) and the Interim Lease until such time as Port Xxxxxx completes
financial closing under the Financing Documents, which will occur on or before
15 August 1999. In the event financial closing does not occur as described, the
provisions of the Letter Agreement shall continue to apply notwithstanding
anything in the Letter Agreement to the contrary. Buyer shall provide written
notice of financial closing to Seller. Upon such notice to Seller, the terms and
conditions in this Agreement shall take effect (other than the last four
sentences in this Section 2.1 which take effect now).
2.2 Start-up Date.
2.2.1 Seller shall cause the Commencement Date to occur on or before
the Startup Date. If Seller fails to achieve the Commencement Date on or before
the Start-up Date, then
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for each Day of delay of the Commencement Date beyond the Start-up Date due to
Seller's acts or omissions. Seller shall pay to Buyer, subject to the Start-up
Damages Cap, liquidated damages of Nineteen Thousand Two Hundred Fifty Dollars
($19,250) per Day for each Day of delay. For purposes of this Agreement.
Seller's acts or omissions shall not include the acts or omissions of Xxxxx.
2.2.2 Buyer shall be ready and able to take the hydrogen on the
Start-up Date and shall not cause a delay in Seller's ability to cause the
Commencement Date to occur. If Buyer is unable to take the hydrogen on the
Start-up Date due to Buyer's acts or omissions or if Seller fails to achieve the
Commencement Date on or before the Start-up Date due to Buyer's or Xxxxx'x acts
or omissions, then for each Day of delay, Buyer shall pay to Seller, subject to
the Start-up Damages Cap, a liquidated damage payment of Thirty-eight Thousand
Five Hundred Dollars ($38,500) per Day for each Day of delay; provided, however,
that in no event shall the aggregate amount of Buyer's payment under this
Section 2.2.2 and Xxxxx'x payment under Section 2.2.2 of the Product Supply
Agreement exceed a liquidated damage payment of (i) Thirty-eight Thousand Five
Hundred Dollars ($38,500) per Day for each Day of delay or (ii) One Million One
Hundred Fifty-five Thousand Dollars ($1,155,000). Payments by Buyer under this
Section 2.2.2 for each Day of delay up to thirty (30) Days shall be in lieu of
the purchase of the Minimum Quantity of Hydrogen hereunder.
2.2.3 Each party shall provide prompt written notice to the other
party in the event it determines that it shall not meet its obligations set
forth in this Section 2.2. In no event shall one party owe any liquidated
damages payments to the other party during the period of time
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that the other party is also liable for liquidated damage payments under this
Section. In the event Buyer has not met its obligations set forth in Section
2.2.2, the Supply Period shall be automatically extended for three (3) Days for
each Day of delay by Buyer hereunder. In no event shall the Start-up Damage Cap
apply in situations in which either party is not meeting its obligations
hereunder due to a discretionary election by such party to not meet such
obligations.
3. DELIVERY AND HYDROGEN AND UTILITY SPECIFICATIONS
3.1 Delivery. Hydrogen shall be delivered by Seller to Buyer at the
Hydrogen Delivery Point, as set forth in Exhibit E, Title and risk of loss with
respect to hydrogen shall pass from Seller to Buyer at the Hydrogen Delivery
Point (the "Hydrogen Delivery Point").
3.2 Hydrogen Specification. Hydrogen delivered to Buyer shall conform to
the following specifications, provided that the Utilities meet the
specifications contained in Exhibit D.
Volume Basis
------------
H(2) 99.9% (vol) (minimum)
CO-CO(2) 1 ppm (vol) (maximum)
N(2) + Ar 509 ppmv (maximum)
CH(4) 0.1 mol% (max)
O(2) 10 ppmv (max)
NH(3) 10 ppmv (max)
S compounds 0.3 ppmv (max)
HCN 0.3 ppmv (max)
HCL 0.3 ppmv (max)
Hg 0.1 ppmv (max)
MEA 0.1 ppmv (max)
Oil 10 ppmv (max)
Dew Point -40 (degrees)F (max) (@ 1 atm.)
-5-
CO and N2 will be continuously monitored. Analysis of Ar, CH4, O2, NH3 and Oil
will be performed on batch samples once each quarter, unless additional samples
are reasonably requested by Buyer and then as reasonably requested.
Delivery pressure:
Minimum Normal Maximum
------- ------ -------
850 psig 865 psig 910 psig
Delivery temperature:
Minimum Normal Maximum
------- ------ -------
56(degrees)F 100(degrees)F 120(degrees)F
3.3 Waiver of Hydrogen Specification. If the hydrogen does not conform to
the specification set forth in this Article 3 for any reason, Seller shall
promptly inform Buyer of the details of such nonconformance and the expected
duration thereof Buyer shall either reject the hydrogen as nonconforming or
waive the nonconformance, in which case Seller shall continue to produce and
deliver hydrogen and such hydrogen shall be deemed to be within specification
for all purposes of this Agreement. Buyer's failure to reject hydrogen not
meeting specifications will not constitute a waiver of Buyer's right in the
failure to reject subsequent deliveries of hydrogen not meeting specifications.
Should the hydrogen be rejected by Buyer, Seller shall promptly effect
modifications to bring the hydrogen within specification, including curtailing
hydrogen or shutting down the Facility, if necessary; provided, that such work
shall be conducted in a manner that minimizes outages at the Facility; and
provided, farther that such remedial action by Seller shall in no way limit
Seller's obligations or Buyer's rights and remedies as set forth in this
Agreement. To the extent Seller tenders hydrogen having a composition of less
than ninety-nine point nine percent (99.9%) (by volume) and such hydrogen is
accepted by Buyer, the
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price for such non-conforming hydrogen will be proportionately reduced by the
ratio of actual hydrogen composition divided by ninety-nine point nine percent
(99.9%).
4. MEASUREMENT
4.1 Fluid Measurement
4.1.1 Products To Be Measured. For purposes of this Agreement, the
product to be measured on a custody transfer basis is hydrogen.
4.1.2 Measurement Period. Volumes and mass flow will be calculated
and reported on a calendar month basis. The billing Day shall be calculated on a
2400-hour basis beginning at 00:00 each calendar Day.
4.1.3 Unit of Measurement. The unit of volume of hydrogen for all
purposes hereunder shall be a standard cubic foot ("SCF"), measured as one (1)
cubic foot of gas at a temperature of 60(degrees)F and at a pressure of 14.73
psia. Steam shall be measured in thousands of pounds ("Mlbs"). Water shall be
measured in thousand of gallons ("Mgal"). Gallon shall mean a unit of volume
equivalent to 231 cubic inches measured at 60(degrees)F. Feed and refinery fuel
gas shall be measured in millions of British Thermal Units ("MMBTU"), higher
heating value ("HHV").
4.1.4 Measurement System. Seller shall design, install, own, operate
and maintain at Seller's expense, metering systems that are capable of measuring
the quantity of hydrogen to be delivered hereunder and determining compliance
with the specifications set forth herein, in accordance with the applicable
industry standards referenced in this section. Such
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meters shall be connected to an electronic gas measurement ("EGM") system ("EGM
System") as defined in the American Petroleum Institute's MPMS, Chapter 21,
Section 1 "Electronic Gas Measurement."
4.1.5 System Design. The measurement systems for the measurement of
hydrogen, shall be designed in accordance with the current standards prescribed
in the most recent version of the American Petroleum Institute's Manual of
Petroleum Measurement Standards (MPMS) Chapter 14, Section 3, "Concentric,
Square-Edged Orifice Meters" (AGA Report No. 3).
4.1.6 Types of Meters.
Metering system components shall be as follows:
(a) Hydrogen meters (Tag Nos. FE-3040, FE-3000) - Orifice
measurement, Daniel's or equivalent meter tube, flow
conditioning, digital temperature and pressure
transmitters, RTD for temperature sensing, and an online
analytical device to measure hydrogen purity that is
technically acceptable to both parties.
(b) The above-mentioned meters shall have a commercial EGM
flow computer such as Bristol Babbcock, Daniel's, or
equivalent.
All meters shall operate within a .3 to .7 Beta Ratio range in conjunction with
an EGM device. These devices shall utilize transmitters installed in conjunction
with an orifice meter run whose orifice taps are in the vertical plane. The
distance between the orifice tap and the transmitter shall be minimized.
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4.1.7 Temperature Determination. The temperature of the fluid
flowing through each of the meters shall be measured with a temperature device
so installed as to provided an accurate measurement of the flowing temperature
at the primary device. These temperature devices shall be "Smart" RTD type
temperature transmitters, utilizing a 100-ohm platinum sensor. The temperature
device shall be capable of determining the temperature to the nearest 0.1
(degree)F.
4.1.8 Pressure Determination. The static and differential pressures
generated by the fluid flowing through each of the meters shall be measured with
a pressure device so installed as to provided an accurate measurement of the
flowing pressure at the primary device. These pressure devices shall be "Smart"
type pressure transmitters. The differential pressure measuring device's range
shall not exceed 200 inches of water. Dual range differential transmitters may
be considered if operating conditions demonstrate a need. The pressure device
shall be capable of determining the pressure to the nearest 1-lb/1 square inch.
4.1.9 Density Determination. The flowing density for hydrogen shall
be calculated using a modified Xxxxxxxx-Xxxx-Xxxxx (MBWR) equation of state in
accordance with National Institute of Standards & Technology (NIST) standards,
(Journal of Physical & Chemical Reference Data, Volume 11 supplement No. 1,
Titled: "Thermophysical Properties Of Fluids, Argon, Ethylene, Parahydrogen,
Nitrogen, Nitrogentrifluoride, & Oxygen").
4.1.10 Sampling Systems. The hydrogen purity shall be determined by
on-line chromatograph or other mutually agreeable method. All samples shall be
analyzed using current Gas Processors Association (GPA 2261) standard. "Analysis
for Natural Gas and Similar
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Gaseous Mixtures by Gas Chromatography" or Gas Processors Association (GPA
2286) standard, "Tentative Method of Extended Analysis for Natural Gas and
Similar Gaseous Mixtures by Temperature Programmed Gas Chromatography". These
analytical results shall be applied to the volumes measured during the
collection period.
4.1.11 Meter Bypasses. Meter bypasses shall not be allowed.
4.1.12 Calculation/Volume Determination. The quantity of hydrogen
delivered shall be deemed conclusively to be the quantity indicated by the
meters and the EGM System; except when the EGM or meters have ceased to function
or are determined to be commercially inaccurate pursuant to Sections 4.1.18 and
4.1.21.
4.1.13 EGM System. The EGM System shall be capable of calculating
all volumes in accordance with the current standards prescribed in the API MPMS
Chapter 14, Section 3; and American Gas Association Report No. 3, "Orifice
Metering of Natural Gas and Other Hydrocarbon Fluids".
The EGM system shall be capable of establishing an audit trail by
compiling and retaining sufficient electronic data and information for the
purpose of verifying daily and hourly quantities, and shall comply with the
American Petroleum Institute MPMS, Chapter 21, Section 1-Electronic Gas
Measurement. Audit trail information shall be preserved for a minimum of three
(3) years.
The measurement data described in the above paragraph and calculated by
the EGM device (flow computer) shall be preserved and provided for auditing
purposes in a mutually agreeable standard format. Unless mutually agreed
otherwise by the parties, standard format
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shall mean the API Chapter 21, Section 1 compliant electronic format provided by
the manufacturer of the device. In addition, the final custody transfer volumes,
and a log of the changes made between the amounts calculated by the EGM device
and the settlement amounts, shall be available if requested by either party.
Unless a currently unresolved exception exists, all volumes shall be considered
final after two years.
4.1.14 Calibrations General. Seller shall calibrate analyzers and
flow meter instrumentation monthly, or on a mutually agreeable schedule, Seller
shall give Buyer at least two (2) Days prior notice of the dates of the
calibrations, or calibrations should occur per a mutually agreeable schedule.
Buyer shall be permitted to witness such calibrations. Buyer shall have the
right to have a representative present at the time of any installing, cleaning,
changing, repairing, inspecting, testing, calibrating or adjusting done in
connection with the equipment used in measuring deliveries.
4.1.15 Calibration of Chromatograph. Chromatograph calibration shall
be in accordance with the GPA Standard 2261 "Analysis for Natural Gas and
Similar Gaseous Mixtures by Gas Chromatography".
4.1.16 Calibration of EGM Devices. Seller shall calibrate EGM
devices used for custody transfer in accordance with API MPMS Chapter 21,
Section 1, and part 8.
4.1.17 Inspection of Orifice Meter Run. During Facility shutdown
periods for maintenance and repair, the hydrogen orifice plates shall be removed
and inspected to ensure compliance with the current API MPMS Chapter 14, Section
3, Part 2, Specification and Installation Requirements.
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4.1.18 Adjustments. An adjustment shall be in order if, upon any
test, the metering equipment in aggregate is found to be recording inaccurately
by plus or minus two percent (2.0%) or more of the reading at normal flowing
conditions. Registration thereof and payment based upon such registration shall
be corrected at the rate of such inaccuracy for any period of inaccuracy that is
definitely known and/or agreed upon. In the event such period of inaccuracy is
not definitely known and/or agreed upon, the adjustment will be made halfway
back to the preceding calibration. Adjustments shall not extend prior to one
hundred eighty (180) Days from the time the error is determined, unless such
error is a result of improper design or installation of the measuring equipment.
Under no circumstance shall an adjustment extend beyond two (2) years prior to
the date that the error was discovered. Following any test, any metering
equipment found to be inaccurate to any degree shall be adjusted immediately to
record accurately. The maximum zero-cutoff value, which may be programmed for
the differential transmitter reading, is .25 inches.
4.1.19 If for any reason the meter is out of service or repair so
that the quantity of Product deliveries through such meter cannot be ascertained
or computed from the readings thereof, the quantity of Product so delivered
during the period when the meter is out of service or repair shall be determined
on the basis of the first of the following methods which is feasible, as agreed
between the parties hereto.
(a) By using the cumulative volumes from any field "check"
measurement source adjusting for historical differences
between the field meters and custody meters. The Seller
agrees to allow the same provisions for Buyer to
witness and audit such measurement
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that the Seller allows on the custody transfer
measurement equipment:
(b) By correcting the error mathematically if the amount of
such error is ascertainable by calibration, test, or
calculation:
(c) By estimating the quantity from the amount of deliveries
during, preceding, and/or following periods where the
delivery condition were similar and the meters were
recording accurately or:
(d) By any other method which is mutually agreeable.
Any volume or energy revision made by the measurement party following
initial closeout shall not be made without a detailed written explanation of the
revision and such changes must be mutually agreed upon between the parties.
Also, the measurement party shall respond in writing within thirty (30) Days
following receipt of any adjustment request, either by making the requested
volume adjustment or by stating its reasons for not doing so.
4.1.20 Inspection of Records. In accordance with Seller's obligation
under Section 10.3, Seller shall preserve all its original test data, and other
records related to the measurements described in this Article 4 for a period of
at least three (3) years, Seller shall make such records available, together
with calculations therefrom, for inspection, copying or verification by Buyer.
All such records shall be the property of Seller.
4.1.21 Metering Accuracy Statement. Metering accuracy is considered
to be plus or minus 2% of reading at normal flowing conditions.
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To the extent that the requirements of this Section 4.1 result in
additional costs and expenses beyond that already provided by Seller, Buyer
shall compensate Seller for Seller's reasonable additional costs and expenses.
5. QUANTITIES
5.1 Hydrogen. During the Supply Period. Seller shall supply and Buyer
shall purchase all of Buyer's requirements for hydrogen for use by Buyer at
Buyer's Plant in excess of the Internal Hydrogen Production up to a maximum
quantity of 80 MMSCFD of hydrogen (the "Dedicated Hydrogen Quantity") at the
price set forth in Section 7.2. For avoidance of doubt, this supply and purchase
obligation will include without limitation Seller supplying and Buyer purchasing
all of Buyer's requirements for hydrogen up to the Dedicated Hydrogen Quantity
for use in Buyer's hydrocracker (Unit 942) excluding Spill Stream Hydrogen as
defined below. For purposes of this Agreement, "Internal Hydrogen Production"
shall mean (i) the 84.8 MMSCFD of hydrogen which may be produced by Buyer or
Xxxxx from their internal sources at Buyer's Plant or Xxxxx'x Plant as set forth
in Cases 1 through 6 in Exhibit K and (ii) 6 MMSCFD (typical) of hydrogen
produced by the pressure swing adsorption unit and compressor owned and operated
by Seller within the battery limits of the Facility to recover such 6 MMSCFD of
hydrogen from Xxxxx'x hydrotreater spill streams (the "Spill Stream Hydrogen").
5.2 Additional Hydrogen. In the event Buyer has requirements for hydrogen
in excess of the Dedicated Hydrogen Quantity (the "Supplemental Hydrogen"),
Buyer may purchase such Supplemental Hydrogen from Seller at the prices set
forth in Section 7.3; provided hydrogen is available for delivery to Buyer from
the Facility (as reasonably determined by Seller). In the
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event Buyer wishes to increase the Dedicated Hydrogen Quantity, Buyer and Seller
will negotiate in good faith the price, terms and conditions for such increase
in the Dedicated Hydrogen Quantity. Seller shall have the right to supply any
hydrogen required by Buyer above the Dedicated Hydrogen Quantity by matching the
terms and conditions (including price) obtained by Buyer for such additional
hydrogen requirements from a bona fide third party supplier. In the event Seller
elects not to supply such additional hydrogen requirements to Buyer, Buyer may
purchase such additional hydrogen requirements from such third party supplier
upon such terms and conditions.
5.3 Minimum Hydrogen Purchase. During the Supply Period, Buyer shall pay
for a minimum quantity of hydrogen equal to 5,018.7 MMSCF per calendar quarter
(the "Minimum Quantity of Hydrogen"), regardless of the quantity of hydrogen
actually taken by Buyer. Buyer shall be invoiced at the end of each calendar
quarter a charge for the difference between the Minimum Quantity of Hydrogen and
the hydrogen delivered to Buyer hereunder in such calendar quarter at the price
set forth in Section 7.5. In the event the Dedicated Hydrogen Quantity set forth
herein is increased for any reason, the Minimum Quantity of Hydrogen shall be
increased on a proportional basis. To the extent the Supply Period does not
begin on a calendar quarter, the Minimum Quantity of Hydrogen shall be prorated
on a per Day basis over the Days remaining in such calendar quarter.
5.3.1 Suspension of Minimum Hydrogen Purchase. Buyer's obligation to
pay for the Minimum Quantity of Hydrogen shall be suspended during periods of
time in which Buyer and Seller have jointly scheduled maintenance activities at
their respective facilities;
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provided, however, that such period of suspension shall be limited to a maximum
of twenty-eight (28) consecutive Days (i) every twenty-four (24) months or (ii)
since the last jointly planned maintenance activity, whichever is longer,
beginning on the Commencement Date. For each Day of jointly scheduled
maintenance, the Minimum Quantity of Hydrogen for that quarter shall be reduced
by (5018.7 x 4)/365 MMSCF. Notwithstanding the foregoing, Buyer's right to
suspend the obligation to purchase the Minimum Quantity of Hydrogen shall not be
available and Buyer shall pay for such Minimum Quantity of Hydrogen in
accordance with the provisions of this Agreement if Buyer has not met the
Two-Year Minimum Purchase Obligation. For purposes of this Agreement, the
"Two-Year Minimum Purchase Obligation" shall mean Buyer's obligation to pay for
a quantity of hydrogen in the prior twenty-four (24) month period at the price
set forth in Section 7.2 equal to or greater than the Minimum Quantity of
Hydrogen times eight (8).
5.3.2 Turnback Hydrogen. During the Supply Period, in the event
Buyer will not be able to take all or any portion of the Minimum Quantity of
Hydrogen for a period of time in excess of thirty (30) consecutive Days (the
"Turnback Hydrogen"), Buyer shall give Seller no fewer than ten (10) business
Day's written notice of such event. Such notice shall set forth the quantity of
Turnback Hydrogen and the period of time that Turnback Hydrogen will not be
taken by Buyer and will be available for resale by Seller hereunder. Upon the
receipt of such notice, Seller shall use all reasonable efforts to resell the
Turnback Hydrogen to third party customers and reduce the Minimum Quantity of
Hydrogen hereunder by the volume of Turnback Hydrogen actually sold by Seller
for the period of time in question. In no event shall Seller be required to
resell Turnback Hydrogen on Buyer's behalf in lieu of or before selling Seller's
Hydrogen Volume. For purposes of this Agreement, "Seller's Hydrogen Volume"
shall mean a volume of
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hydrogen in MMSCFD equal to "A" plus "B," where "A" is the current production
capacity in MMSCFD of the facilities owned and/or operated by Seller and its
affiliates connected to the Pipeline Network (other than the Facility) and "B"
is the current production capacity of the Facility in MMSCFD minus 55 MMSCFD.
5.4 Pipeline Hydrogen.
5.4.1 During the Supply Period, in the event the Facility is not
operating or production therefrom is curtailed due to the acts or omissions of
Seller, Seller shall supply (or cause to be supplied) and Buyer shall purchase
Buyer's requirements for hydrogen up to the Dedicated Hydrogen Quantity;
provided hydrogen is available for delivery (as reasonably determined by Seller)
from the Pipeline Network (the "Pipeline Hydrogen"). The price for such hydrogen
shall be at the price set forth in Section 7.2.
5.4.2 During the Supply Period, in the event the Facility is not
operating or production therefrom is curtailed for any reason other than due to
the acts or omissions of Seller, Seller shall supply and Buyer shall purchase
Buyer's requirements for hydrogen up to the Dedicated Hydrogen Quantity;
provided hydrogen is available for delivery (as reasonably determined by Seller)
from the Pipeline Network (the "Pipeline Hydrogen") at the price set forth in
Section 7.4.
5.4.3 During the Supply Period, in the event Buyer has requirements
for hydrogen in excess of the capacity of the Facility, Buyer may purchase
Buyer's additional requirements for hydrogen as Pipeline Hydrogen. The price for
such hydrogen shall be set forth in Section 7.4.
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5.5 Hydrogen Order Rate. Seller shall operate the Facility to produce and
deliver hydrogen at a reasonably uniform rate of flow and at the approximate
rate of production ordered by an authorized representative of Buyer (the
"Hydrogen Order Rate") up to the Dedicated Hydrogen Quantity. Seller will record
in its operating records Hydrogen Order Rates and changes thereto requested by
Buyer's representative and the quantities delivered to Buyer. Seller shall
adjust the approximate rate of production and delivery of hydrogen as requested
by an authorized representative of Buyer to a different approximate rate of
production and delivery in a timely mailer. Rate changes, including start-ups
and shutdowns of the facility, will be performed in a safe and efficient manner
and in a fashion which will minimize thermal stresses to the Facility. Seller
shall use commercially reasonable efforts to achieve the typical elapsed time
for changes (from commencement by Seller of actions to make rate change to
completion of such change) as follows:
Type of Change Typical Elapsed
in Rate of Delivery Time for Change
------------------- ---------------
To change operating rate of Three (3) hours for rate
the Facility when in decreases of 40%.
operation. Four (4) hours for rate
increases of 40%
(smaller changes pro-rated).
To resume the flow of Twenty-four (24) hours.
hydrogen during a cold
restart of the Facility
To resume the flow of
hydrogen during a hot restart
of the Facility:
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To 50% of Dedicated Eight (8) hours.
Hydrogen Quantity'
To 100% of Dedicated Sixteen (16) hours.
Hydrogen Quantity
To reduce operating Six (6) hours.
rate of the Facility after
a total curtailment of
flow by Buyer.
5.5.1 With respect to this Section, Hydrogen Order Rate changes
which are more than five percent (5%) of the then current Hydrogen Order Rate
shall be limited to a total of fourteen (14) in any seven (7) Day period. In
addition, Buyer shall exercise commercially reasonable efforts to minimize
thermal cycling of the Facility through its Hydrogen Order Rate changes. Should
the number of Hydrogen Order Rate changes exceed the limits described above,
Seller shall determine the additional cost, if any, of such Hydrogen Order Rate
changes on Seller's labor and maintenance costs, and Buyer shall reimburse
Seller for such additional costs. Buyer shall have the right to audit at their
cost and at reasonable business hours, all available supporting documentation
associated with such reimbursement obligations prior to payment. Any quantities
of hydrogen ordered by Buyer under this Agreement but not taken by Buyer for any
reason shall be deemed to be delivered by Seller to Buyer for purposes of this
Agreement. It is understood that Seller may operate the Facility in excess of
the Hydrogen Order Rate for purposes of supplying hydrogen to the Pipeline
Network.
5.6 Capacity Curtailment. In the event that natural gas supply pressure to
the Facility falls below 500 psig (measured at the Facility's inlet flange),
Seller's steam methane reformer
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hydrogen production capacity will be reduced. By way of illustration, at 450
psig natural gas supply pressure, steam methane reformer hydrogen production
capacity is expected to be approximately 79 MMSCFD. In such event, Buyer's
Dedicated Hydrogen Quantity shall be reduced by an amount equal to eighty
percent (80%) of the amount of the shortfall in (i) the 100 MMSCFD capacity of
the steam methane reformer or (ii) the current utilized capacity, whichever is
less. Hydrogen supplied to Buyer in excess of the reduced Dedicated Hydrogen
Quantity shall be at the Pipeline Hydrogen Charge.
5.7 Scheduled Maintenance. The parties shall give each other as much
notice as is reasonably possible of scheduled maintenance periods at their
respective facilities that will affect the ability of the parties to deliver or
use hydrogen, but in no event shall such notice be less than sixty (60) Days.
The parties shall use commercially reasonable efforts to coordinate (i)
maintenance shutdowns at their respective facilities and (ii) any other
maintenance activities at such facilities that will affect the ability of either
party to operate its facilities. The parties acknowledge that the Facility will
require a scheduled maintenance period (i) no later than twelve (12) months
after the Commencement Date, lasting approximately ten (10) days in aggregate,
and (ii) at approximately twenty-four (24) month intervals thereafter lasting
approximately ten (10) days in aggregate for each outage. In addition, the
parties acknowledge that the gas turbine generator will undergo maintenance in
accordance with the schedule attached hereto as Exhibit G. Seller shall make all
reasonable efforts to coordinate scheduled downtime of the gas turbine generator
with scheduled downtime of the steam methane reformer.
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5.8 Operations Interface Meetings. The parties shall conduct, on at least
a quarterly basis, operations interface meetings to review (i) upcoming events
which may impact the parties, (ii) significant safety, operational and quality
changes, (iii) expected rate and feedstock changes and (iv) any other matters
related to this Agreement.
6. FEED AND FUEL SUPPLY TO THE FACILITY
6.1 Refinery Fuel Supply to the Facility. In each month during the Supply
Period, under the Product Supply Agreement, Xxxxx may at Xxxxx'x option provide
refinery fuel gas to Seller for use at the Facility for the production of
hydrogen for Buyer and for Seller's requirements for delivery of hydrogen into
the Pipeline Network, in accordance with Section 10.2 of Exhibit D.
6.1.1 In determining the value of refinery fuel provided to the
Facility by Xxxxx, the actual stream composition and heating value shall be
used.
6.1.2 Refinery fuel provided to the Facility by Xxxxx, shall be
valued per MMBTU, higher heating value (HHV) where each MMBTU of refinery fuel
gas is multiplied by an efficiency factor which shall be calculated in
accordance with Exhibit I, the monthly sum of which hereinafter is referred to
as "Rfa". Rfa shall be valued on a monthly basis at the unit price for natural
gas for month n.
6.2 Natural Gas Supply to the Facility. Seller will supply or arrange for
the supply of natural gas to satisfy the requirements of the Facility. The price
for natural gas, "NG", shall be equal to the weighted average actual unit cost
of natural gas in dollars per MMBTU, HHV,
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delivered to the Facility's inlet flange, including all taxes, rounded off to
three decimal places. Upon request, Seller shall provide Buyer with access to
any and all information forming the basis for the calculation of Seller's price
for natural gas, NG, for the Facility.
6.3 Natural Gas Supply Agreements. Buyer reserves the right to review and
approve the natural gas supply agreement(s) that Seller enters into for the
Facility, such approval not to be unreasonably withheld.
7. PRICE
7.1 Base Facility Charges. During the Supply Period, Buyer shall pay
Seller monthly the following Base Facility Charges ("BFC"):
Hydrogen Compression $ 75,966/mo.
Condensate Snipper $ 5,873/mo.
The Base Facility Charges shall be payable beginning on the Commencement Date
and shall be paid regardless of the quantity of hydrogen taken by Buyer. The
Base Facility Charges shall be adjusted in accordance with Section 8.1. Buyer
may elect to pre-pay a lump sum for the capital related portion of the Base
Facility Charges in accordance with the provisions of Exhibit J.
7.2 Dedicated Hydrogen Charge. During the Supply Period, Buyer shall pay
Seller monthly a charge of $1.278/MSCF for all hydrogen delivered by Seller to
Buyer from the Facility up to the Dedicated Hydrogen Quantity (the "Dedicated
Hydrogen Charge").
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7.3 Supplemental Hydrogen Charge. During the Supply Period. Buyer shall
pay Seller monthly a charge of $1.585/MSCF for all Supplemental Hydrogen
delivered by Seller to Buyer (the "Supplemental Hydrogen Charge").
7.4 Pipeline Hydrogen Charge. During the Supply Period, Buyer shall pay
Seller monthly a charge of $1.585/MSCF for all Pipeline Hydrogen delivered by
Seller to Buyer (the "Pipeline Hydrogen Charge").
7.5 Hydrogen Non-Consumption Charge. During the Supply Period, for any
shortfall in Buyer's hydrogen purchase activity, Buyer shall pay Seller
quarterly a charge equal to the then current Dedicated Hydrogen Charge ("DHC")
minus the natural gas-related component of the DHC multiplied by such shortfall.
Such shortfall (if any) shall be equal to the difference between the Minimum
Quantity of Hydrogen and the volume of hydrogen delivered to Buyer hereunder in
such calendar quarter (but only if such difference is a positive number). In
addition, in respect of efficiency effects from operating the Facility at
reduced capacity, Buyer shall pay Seller a charge ("Efficiency Charge") based on
the actual quantity of hydrogen produced by the Facility in such calendar
quarter. Such charge shall be calculated as follows:
Efficiency Charge ($) = V x DE x NG(3) x days in the quarter
Where:
V= the actual daily volume of hydrogen produced by the steam methane
reformer within the Facility in such quarter, in MMSCFD, excluding
Facility outages.
DE is from the table below
NG(3) is the average cost of natural gas in ($/MMBtu) for such quarter
determined by taking the average of NG for each of the quarter's
three months.
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Where the actual daily volume, V, was: DE shall equal:
-------------------------------------- ---------------
less than 75MMSCFD and more than 3.3
or equal to 70MMSCFD
less than 70MMSCFD and more than 6.6
or equal to 65MMSCFD
less than 65MMSCFD and more than 10.0
or equal to 60MMSCFD
less than 60MMSCFD and more than 16.8
or equal to 55MMSCFD
less than 55MMSCFD and more than 23.5
or equal to 50MMSCFD
less than 50MMSCFD and more than 30.3
or equal to 45MMSCFD
less than 45MMSCFD 37.0
7.6 One Time Charges. No later than 1 September 2000, Buyer shall pay
Seller a lump sum for each of the following items:
Flare Stack $521,180
Control Building Protection $300,000 [Final price pending]
8. PRICE ADJUSTMENT
8.1 Base Facility Charges ("BFC"). The Base Facility Charges set forth in
Section 7.1 shall be adjusted each month after the Commencement Date as follows:
8.1.1 For Hydrogen Compression:
BFC(n) = BFC(0) x [0.71 + 0.29 x (0.25 x PPIn/PPIc + 0.75 x Ln/Lc]
Where:
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BFC(0) = $75.966/month
BFC(n) = Base Facility Charge for billing month n
L(n) = Employment Cost Index for billing month n
L(c) = Employment Cost Index at the Commencement Date
PPI(c) = PPI for billing month n
PPI(c) = PPI at the Commencement Date
8.1.2 For Condensate Stripper:
BFC(n) = BFC(0) x [0.70 + 0.30 x (0.25 x PPI(n)/PPI(c) + 0.75 x
L(n)/L(c))]
Where:
BFCo = $5,873/month
BFCn = Base Facility Charge for billing month n
Ln = Employment Cost Index for billing month n
Lc = Employment Cost Index at the Commencement Date
PPIn = PPI for billing month n
PPIc = PPI at the Commencement Date
8.2 Dedicated Hydrogen Charge ("DHC"). The Dedicated Hydrogen Charge set
forth in Section 7.2 shall be adjusted each month after the Commencement Date as
follows:
DHC(n) = DHC(o) x [0.2 + .71 x NG(n)/NG(0) + 0.09 x (08 x L(n)/L(c) + 0.2
x PPI(n)/PPI(c)]
Where:
DHC(0) = $l.278/MSCF
DHC(n) = Dedicated Hydrogen Charge for billing month n
L(n) = Employment Cost Index for billing month n
L(c) = Employment Cost Index at the Commencement Date
PPI(n) = PPI for billing month n
PPI(c) = PPI at the Commencement Date
NG(n) = Average cost of natural gas for the Facility in billing
month n
NG(o) = $2.25/MMBTU
8.3 Supplemental Hydrogen Charge ("SHC"). The Supplemental Hydrogen Charge
set forth in Section 7.3 shall be adjusted monthly as follows:
-25-
SHC(n) = SHC(0) x [0.2 + .71 NG(n)/NG(0) + 0.09 x (0.8 x L(n)/L(c) + 0.2 x
PPI(n)/PPI(c))]
Where:
SHC(0) = $1.585/MSCF
SHC(n) = Supplemental Hydrogen Charge for billing month n
NG(n) = Average cost of natural gas for the Facility in billing
month n
NG(0) = $2.25/MMBTU
L(n) = Employment Cost Index for billing month n
L(c) = Employment Cost Index at the Commencement Date
PPI(n) = PPI for billing month n
PPI(c) = PPI at the Commencement Date
8.4 Pipeline Hydrogen Charge ("PHC"). The Pipeline Hydrogen Charge set
forth in Section 7.4 shall be adjusted monthly as follows:
PHC(n) = PHC(0) x ((.20 + .65 x NG(n)/NG(0) -- 0.10 x L(n)/L(0) +/-
0.05 x P(n)/P(0))
Where:
PHC(0) = $1.585/MSCF
PH(n) = Pipeline Hydrogen Charge for billing month x.
XX(0) = $2.25/MMBTU
NG(n) = Seller's average cost of natural gas for Pipeline
Plants during the preceding month in $/MMBTU.
L(0) = Employment Cost Index for August 1998
L(n) = Employment Cost Index for billing month n
P(0) = 50.035/KWH
P(n) = Seller's average cost of electricity for Pipeline
Plants during the preceding month in $/KWH
8.5 Indices. For purposes of Sections 8.1 through 8.4. the following
indices shall be used:
L = Employment Cost Index. Total Compensation, Private Industry
Workers, Professional Specialty and Technical, not seasonally
adjusted.
PPI = Producer Price Index. Chemical and Manufacturing Industries,
Machinery Equipment and Parts, Code 35591.
-26-
P = Producer Price Index. Steel Mill Products, 10-17
LI = Average Weekly Earnings Index, SIC Code 3511 (Turbine)
8.6 Change of Indices. In the event any of the indices referred to in
Sections 8.1 through 8.5 cease to be published as constituted as of the
Effective Date hereof, the parties shall mutually agree upon a suitable
substitute index as required for purposes of this Article 8. In the event either
party believes an index no longer accurately reflects the intent of the parties
in choosing such index, such party may notify the other party of such belief and
the parties shall negotiate in good faith a substitute index. In no event shall
either party have the right to exercise such right more than one (1) time every
five (5) Contract Years. Seller shall use the most recently available value
(whether preliminary, estimated or final) for each index at the xxxx Xxxxxx
prepares each invoice.
8.7 Estimated Natural Gas Costs. In the event that the average actual cost
of natural gas for billing month n is not available at the time of billing then
an estimated cost of natural gas may be used, such estimate to be based upon the
best natural gas volume and price information available at the time; provided,
however, if estimated costs are used then an adjustment for actual costs will be
made no later than the next billing cycle following the reasonable availability
of such actual cost information.
9. PERFORMANCE GUARANTEE
9.1 On-Stream Guarantee. Seller guarantees that Seller will produce and
deliver hydrogen within specification at the Hydrogen Order Rate requested by
Buyer with a minimum
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On-Stream Factor of ninety-eight percent (98%). As used herein, the term
"On-Stream Factor" means the following:
(X+Y)/N x 100% = "On-Stream Factor"
Where:
X = Hours during the Contract Year which hydrogen meeting the
specifications set forth herein was supplied by Seller as
adjusted for hydrogen curtailment as set forth below.
Y = Hours during the Contract Year which hydrogen could have
been supplied by Seller but for the occurrence of any of the
following: events of Force Majeure; scheduled maintenance
outages by Seller; provided, however, that in no event shall
the number of hours credited for such scheduled maintenance
outages in any Contract Year exceed the number of hours
allocated to such Contract Year set forth in Section 5.7;
direction from Buyer from time to time to cease operation;
acts by Buyer or third parties not within the control of
Seller to the extent such acts do not constitute Force
Majeure; or Buyer's failure to take hydrogen.
N = Total number of hours during the Contract Year
During any period in which Seller is supplying hydrogen at a curtailed rate, "X"
above shall be reduced by the percentage of curtailment caused by Seller
relative to the Hydrogen Order Rate which is in effect during such period of
curtailment. For example, if delivery to Buyer is curtailed by thirty percent
(30%) for a period of ten hours, "X" will be reduced by thirty percent (30%) of
the ten hours or three hours. In the event Seller curtails Buyer's Hydrogen
Order Rate to an extent which causes Buyer's hydrocracker to become
non-operational, "X" will be reduced to zero during such period of curtailment.
9.2 An account (hereinafter referred to as the "Bonus/Liquidated Damage
Account") will be established to record the on-stream performance on an annual
basis. If the On-Stream Factor
-28-
is greater than 98%, the number of hours in excess of 98% will be credited to
the Bonus/Liquidated Damage Account: conversely, if the On-Stream Factor is less
than 98%, the number of hours less than 98% will be debited to the
Bonus/Liquidated Damage Account. The Bonus/Liquidated Damage Account shall be
reconciled after two complete Contract Years of On-Stream performance have been
recorded in the Bonus/Liquidated Damage Account, and annually thereafter based
on the On-Stream performance during the most recent two-year period as recorded
in the Bonus/Liquidated Damage Account, as follows: If a debit balance exists in
the Bonus/Liquidated Damage Account after such two-year period, Seller shall pay
Buyer a liquidated damage payment equal to the number of hours in the debit
balance multiplied by $5,200 per hour. If a credit balance exists in the
Bonus/Liquidated Damage Account after such two-year period, Buyer will pay
Seller a bonus payment equal to the number of hours in the credit balance
multiplied by $5,200 per hour. In no event shall Buyer's bonus payment exceed
$900,000 or Seller's liquidated damage payment exceed $1,800,000 in the
aggregate during any Contract Year. Attached hereto as Exhibit H is an example
of this calculation.
10. TERMS OF PAYMENT
10.1 Invoicing. During the Supply Period, Seller shall deliver an invoice
to Buyer on or before the tenth (10th) Day of each calendar month (i) for
quantities of hydrogen delivered or deemed to be delivered in the preceding
calendar month in accordance with Article 5, (ii) for the Base Facility Charges
for the current calendar month, and (iii) for other sums due hereunder and
related to the preceding calendar month (or calendar quarter, if appropriate).
Seller may deliver such invoice by mall, facsimile, electronic data interchange
or other mutually acceptable means.
-29-
All payments due Seller hereunder shall be made to Seller by electronic transfer
at the location indicated on the invoice, payable within thirty (30) Days from
date of invoice. It is agreed that the timely payment by Buyer of all undisputed
amounts due and owing to Seller hereunder is an express condition to the
continued performance by Seller of its obligations hereunder.
10.2 Interest Rate for Late Payments. All amounts payable hereunder if not
paid when due will accrue interest daily at the annual rate of interest
announced from time to time by The Chase Manhattan Bank, N.A. at its offices
located in New York, New York as its prime commercial interest rate for U.S.
Dollar-denominated loans originated in the United States plus two percent (2%)
calculated from the due date of such payment until the date of payment. In the
event an amount is subject to a valid dispute, interest will not accrue on such
amount if the dispute is resolved in favor of Buyer.
10.3 Recordkeeping; Access to Books and Records. Seller shall, in
accordance with good business practices, keep and maintain such books, records,
accounts and other documents which are sufficient to reflect accurately and
completely all amounts which form the basis for any invoice submitted hereunder,
including, without limitation, records maintained pursuant to Section 4.1.20
hereof Buyer shall have the right to inspect and examine, during regular
business hours and on not less than ten (10) calendar Days notice to Seller all
records maintained pursuant to this Section.
11. GOVERNMENT REQUIREMENTS
11.1 Government Requirements. If the facilities producing hydrogen for
delivery to Buyer hereunder must be modified, additional equipment must be
installed, or tests, studies or
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any other action must be undertaken with respect to such facilities or their
operations to comply with any anticipated, proposed or final regulation, order,
law, decree or other requirement of any governmental authority ("Regulation")
which in Seller's reasonable judgment may require such modifications, tests or
other action, Seller (or the facility owner) will effectuate such modifications,
tests or other action following (i) in the case of a final Regulation,
consultation with Buyer concerning the anticipated costs and expenses thereof to
confirm that there is not a more cost effective manner to comply with such final
Regulation or (ii) in the case of an anticipated or proposed regulation, the
consent of Buyer (which consent shall not be unreasonably withheld); provided,
however, that Seller shall have given Buyer prompt notice of its knowledge of
any proposed Regulation. Notwithstanding the foregoing, in the event Buyer is
responsible for any obligation hereunder, Seller agrees (i) to refrain from
objecting or in any way opposing an application by Buyer to intervene before any
regulatory' body or judicial forum, in which the approval of such Regulation is
at issue, or otherwise fully participate before such body or forum, (ii) that if
Buyer is unable to intervene or participate on its own behalf before any
regulatory body or judicial forum in which the approval of such Regulation is at
issue, upon Buyer's request, Seller shall intervene on Buyer's behalf at Buyer's
expense, (iii) that Buyer shall have the right to pursue, or participate in, an
appeal of any final Regulation before the relevant legislative, judicial or
government authority of competent jurisdiction, and (iv) that if Buyer is unable
to pursue an appeal of any final Regulation on its own behalf, upon Buyer's
request, Seller shall pursue an appeal on Buyer's behalf at Buyer's expense,
except in each case (i) through (iv), any action which Seller reasonably
believes would have a material adverse impact on Seller or its business. The
parties agree to cooperate with one another in order to minimize
-31-
any costs and expenses incurred pursuant to this Section. Buyer's Pro Rata Share
of the total costs and expenses of such modifications, tests or other action,
including both fixed and variable costs, additional operating costs, applicable
overheads, general and administrative expenses, financing charges and a
reasonable fee, all in accordance with Seller's normal accounting practices,
shall be promptly reimbursed to Seller by Buyer as such costs and expenses are
incurred; provided, however, that should the aggregate amount of Buyer's Pro
Rata Share of such costs and expenses related to any single Regulation exceed
$250,000, Buyer shall promptly reimburse Seller an amount equal to $250,000 and
thereafter Seller and Buyer shall establish a mechanism for reimbursement of the
balance of such costs and expenses by Buyer through periodic payments over the
remainder of the Supply Period. Buyer shall have the right to audit at its cost
and at reasonable business hours, all available supporting documentation
associated with such modifications prior to payment. Seller shall be responsible
for its share of any costs and expenses incurred pursuant to this Section.
11.2 Contaminants. It is understood and contemplated by the parties that
the Facility is designed to use Utilities and air containing only normal
contaminants, as more fully described in Exhibit D, and therefore if
contaminants in the Utilities or air, or changes in the construction or
operation of facilities in or about Buyer's Plant, justify the relocation,
repair, modification or removal of any equipment comprising the Facility or the
installation of additional equipment, Seller shall notify Buyer, and at Buyer's
election. Seller shall either (i) make such relocation, repair, modification, or
removal or (ii) install such additional equipment. Buyer shall reimburse Seller
for any extra costs incurred and a reasonable fee all in accordance with
Seller's normal accounting practices as such costs are incurred; provided,
however that should the aggregate
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amount of such extra costs exceed $250,000. Buyer shall promptly reimburse
Seller an amount equal to $250,000 and thereafter Seller and Buyer shall
establish a mechanism for reimbursement of the balance of such costs by Buyer
through periodic payments over the remainder of the Supply Period. Buyer shall
have the right to audit at its cost and at reasonable business hours, all
available supporting documentation associated with such reimbursement
obligations prior to payment.
11.3 Licensing, Permits and Approvals. Each party shall obtain, in a
timely fashion, and maintain in effect, including all renewals and updates
thereof any and all professional licenses, Permits or other government approvals
necessary for the performance of its obligations hereunder and any activities
related hereto, including, without limitation, air emissions permits from the
Texas Natural Resource Conservation Commission.
11.4 Compliance with Law and Prudent Industry Standards. Each party shall
perform its obligations hereunder and any activities related hereto in
compliance with all Applicable Laws and Permits and in accordance with Prudent
Industry Standards and shall not undertake any act or omission which will cause
the other party to fail to comply with Applicable Laws and Permits and in
accordance with Prudent Industry Standards. Without limiting the generality of
the foregoing, neither party shall undertake any act or omission which would
cause or be likely to cause it or the other party to be subject to regulation as
an "electric utility", "electric corporation", "electrical company", "public
utility", "retail electric utility", "retail electric provider", "power
generation company" or a "public utility holding company" (as such terms may be
revised from time to time) under any Applicable Laws (an "Electric Utility").
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12. TAXES
12.1 Seller shall bear and pay all federal, state, and local taxes based
upon or measured by its net income, and all franchise taxes based upon its
existence or its general right to transact business. The prices as stated herein
do not include any taxes, charges, or fees other than as stated in the prior
sentence. If any other taxes, charges or fees, now or hereafter imposed by or
under the authority of any federal, state or local law, rule or regulation
howsoever denominated and howsoever measured (including, but not limited to,
energy taxes, value added taxes, pollution or environmental taxes, taxes on
services, real estate taxes, sales and use taxes and ad valorem taxes), are
imposed on the Facility, the Facility Site, the inventory, or upon the operation
or maintenance of the Facility, or upon or measured by the production,
manufacture, storage, sale, transportation, delivery, use or consumption of
hydrogen. Buyer's Pro Rata Share of such taxes, charges, or fees shall be paid
directly by Buyer, or if paid by Seller shall be invoiced to Buyer as a separate
item and paid by Buyer to Seller. Seller shall be responsible for its share of
any taxes, charges, or fees incurred pursuant to this Section.
12.2 Property Taxes and Payment in-lieu-of Tax Agreements. The parties
understand and agree that Seller has not independently negotiated or obtained,
and does not intend to independently negotiate or obtain, directly with any
taxing authority having jurisdiction or potential jurisdiction over the Facility
or Facility Site, any property tax relief, property tax abatements or
incentives, or agreements in-lieu-of taxes, that would apply to the Facility,
the Facility Site or any of Seller's property to be located at the Facility
Site, it being understood by the parties hereto that Buyer has initiated such
matters directly and desires to continue such efforts. Buyer represents to
Seller that it has secured or is in the process of negotiating and
-34-
obtaining agreements for payments in-lieu-of taxes or abatement of property
taxes ("Property Tax Agreements") with the City of Port Arthur, Jefferson
County, the Port Xxxxxx Navigation Agency, Drainage District Number 7, and
perhaps other governmental authorities, which allow or will allow Seller (and
any assignee of Seller), Seller's Facility, the Facility Site and Seller's (or
an assignee's) property at the Facility Site, to be included (by assignment,
amendment or otherwise) under the terms of such Property Tax Agreements. Based
upon the foregoing, Buyer agrees that with respect to property taxes, ad valorem
taxes and any payments due under any Property Tax Agreements that are imposed
upon or arise in connection with the construction, ownership, possession,
operation or control of the Facility, the Facility Site or Seller's (or an
assignee's) property at the Facility Site, Buyer hereby agrees that it shall be
responsible for, as between Seller and Buyer. Buyer's Pro Rata Share of
property, ad valorem taxes and payments under the Property Tax Agreements, and
Buyer agrees to reimburse Seller therefore and indemnify, defend and hold
harmless Seller therefrom. Seller agrees to cooperate reasonably with Buyer and
Buyer agrees to cooperate reasonably with Seller in obtaining Property Tax
Agreements that will include or cover Seller (and any assignee of Seller), the
Facility, Facility Site and Seller's (or an assignee's) property at the Facility
Site provided that (i) such cooperation shall be at Buyer's expense with respect
to third party costs, if any, and (ii) such cooperation shall not have an
adverse impact upon Seller (taking into account Buyer's obligations set forth in
the preceding sentence). Seller shall cooperate with Buyer to the extent
commercially reasonable to hire local contractors who are deemed by Seller to be
qualified to provide the services required.
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13. FORCE MAJEURE
13.1 Definition. Neither party hereto shall be considered in default in
the performance of its obligations hereunder or be liable in damages for failure
or delay in performance which is due to Force Majeure, provided that the excuse
of performance shall be of no greater scope and no longer duration than is
reasonably required because of the Force Majeure. For purposes of this
Agreement, "Force Majeure" shall include any act or event that prevents or
delays the performance by either party of its obligations hereunder if and to
the extent (i) such act or event is beyond such party's reasonable control and
not the result of such party's fault or negligence, (ii) such party has been
unable to overcome the consequences of such act or event by the exercise of
reasonable commercial efforts, which may include the reasonable expenditure of
funds, and (iii) such party has given the other party notice within ten (10)
Days of such party's knowledge of the act or event giving rise to such Force
Majeure. Subject to the satisfaction of the foregoing conditions, Force Majeure
shall include, but not be limited to, the following acts or events, or any
similar and equally serious acts or events which prevent or delay the
performance by a party of its obligations hereunder: acts of God; acts of the
public enemy; acts by Seller, in the case of Buyer, or acts by Buyer or Xxxxx,
in the case of Seller; wars; sabotage; insurrections; riots; strikes; boycotts
or lockouts (except any such strike, boycott or lockout that involves Seller's
or Buyer's employees (as the case may be) and is not national or industry-wide
or is not caused by the other party's employees); a determination that such
party is subject to regulation as an Electric Utility under Applicable Law
(regardless of whether delivery of power is prevented); vandalism; blockages;
labor disputes; boycotts; fires; explosions; vapor releases; natural disasters;
floods; perils of the sea; lightning; wind; ability to obtain or maintain any
easement.
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rights-of-way, permit or license; actions of a court or public authority
(including the denial, revocation or nonrenewal of a permit, certificate or
license); accidents or failure of equipment or machinery; or allocation or
failure of normal sources of supply of materials, transportation, energy or
utilities or other causes of a similar or dissimilar nature. Under no
circumstances will inability to pay monies or other economic difficulty on
behalf of Buyer or Seller be construed to constitute Force Majeure, frustration
or impossibility of performance.
13.2 Efforts to Remedy. The affected party shall use all commercially
reasonable efforts to remedy its inability to perform, except that neither parry
hereto shall be required to bring to an end any strike or other concerted act of
workers.
13.3 Notice. The party affected by an event described in Section 13.1
shall, promptly upon learning of such event and ascertaining that it has
affected or will affect such party's performance hereunder, give notice to the
other party and to the Financing Parties, stating the nature of the event, its
anticipated duration and any action being taken to avoid or minimize its effect.
13.4 Payment. Nothing contained in Section 13.1 above shall relieve Buyer
of its obligation to pay any charges due hereunder. Notwithstanding the
foregoing sentence, if during any Contract Year there is a period of Force
Majeure which prevents Seller from supplying hydrogen in accordance with the
terms and conditions contained herein, and such period exceeds thirty (30)
consecutive Days, then Buyer may elect to suspend payment of the charges due
hereunder for the Minimum Quantity of Hydrogen on the next Day of Force Majeure
until Seller's performance hereunder resumes; provided, however, that such
payment abatement shall
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not be available to Buyer if the Force Majeure event preventing Seller from
supplying hydrogen hereunder is caused by the acts or omissions of Buyer or
Xxxxx. The Supply Period shall be extended for three (3) Days for each Day of
suspension of the charges in accordance with this Section at Seller's option.
14. WARRANTY
14.1 Conformance to Specification. Seller warrants that hydrogen delivered
to Buyer shall conform to the specification set forth in Section 3.2, and that
at the time of delivery Seller shall have good title and right to transfer the
same and that the same shall be delivered free and clear of any lien or other
encumbrances.
14.2 Limitations. THE WARRANTIES SET FORTH IN SECTION 14.1 ARE IN LIEU OF
ALL OTHER WARRANTIES BY SELLER, EXPRESS OR IMPLIED, IN FACT OR BY LAW,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
15. LIMITATION OF LIABILITY
15.1 Determination of the suitability of the hydrogen furnished hereunder
for the use contemplated by Buyer is the sole responsibility of Buyer, and
Seller shall have no responsibility in connection therewith.
15.2 Buyer acknowledges that there are hazards associated with the use of
hydrogen, that it understands such hazards, and that it is the responsibility of
Buyer to warn and protect its
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employees and others exposed to such hazards through Buyers use of hydrogen.
Seller will provide Buyer with copies of Material Safety Data Sheets relating to
hydrogen for Buyer to make such warnings, and Buyer shall hold harmless,
indemnify and defend Seller from and against any liability incurred by Seller
because such warnings were not made, Buyer assumes all risk and liability for
loss, damages or injury to persons or to property of Buyer or others arising out
of the presence or use of hydrogen or from the failure to make such warnings.
15.3 Buyer acknowledges that it can obtain and install devices to sample
hydrogen delivered to determine its compliance with specifications prior to use.
15.4 SELLER'S SOLE LIABILITY AND BUYER'S SOLE AND EXCLUSIVE REMEDY FOR THE
NON-DELIVERY OF HYDROGEN OR FOR THE DELIVERY OF HYDROGEN NOT CONFORMING TO
SPECIFICATIONS SHALL BE AS SET FORTH IN ARTICLE 9.
15.5 EXCEPT AS EXPRESSLY PROVIDED IN SECTION 15.4, SELLER SHALL NOT BE
LIABLE IN CONTRACT OR TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE OR STRICT
LIABILITY) FOR ANY OTHER DIRECT DAMAGES. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, BUT EXCEPT IN THE CASE OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SELLER, SELLER SHALL NOT BE LIABLE IN CONTRACT OR TORT (INCLUDING WITHOUT
LIMITATION NEGLIGENCE OR STRICT LIABILITY) FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING BY WAY OF ILLUSTRATION AND NOT
OF LIMITATION, LOSS OF USE, LOSS OF WORK IN
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PROCESS, DOWN TIME OR LOSS OF PROFITS, AND SUCH LIMITATION ON DAMAGES SHALL
SURVIVE FAILURE OF AN EXCLUSIVE REMEDY.
15.6 Claims for non-delivery of hydrogen or delivery of non-specification
hydrogen shall be void unless notification is given to Seller's operating
personnel promptly upon discovery and confirmed in writing by Buyer within five
(5) working Days thereafter.
16. BUYER'S OBLIGATIONS
16.1 Permits. Buyer agrees to assist Seller as reasonably requested in any
activity related to Sellers obligations under Section 11.3.
17. TERMINATION
17.1 Termination for Default. Subject to the rights of the Financing
Parties under Section 17.1.1, this Agreement may be terminated by either party
on account of any material default of the other in carrying out the terms
hereof; provided, however, that if the party so in default (or in the case of
Buyer, the Financing Parties as described in Section 17.1.1) shall, within sixty
(60) Days after written notice thereof from the other party, cure such default
or prepare a program to effect such cure and thereafter diligently pursue such
program to completion within a reasonable period of time, then in either case
the right of termination shall be nullified and shall be of no effect; provided
further, however, that the curing of any such default shall not affect the right
to terminate this Agreement as aforesaid in the event of subsequent material
defaults.
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17.1.1 Rights of Financing Parties. For so long as Buyer's
obligations under the Financing Documents are outstanding, Buyer and Seller
agree (i) to furnish the Financing Parties all notices of default delivered
pursuant to Section 17.1 concurrently with delivery to the defaulting party,
(ii) Seller shall not terminate this Agreement if the Financing Parties have
cured Buyer's default within twenty (20) Days of receipt by the Financing
Parties written notice to the Financing Parties that (x) Seller has a matured
right to terminate this Agreement and (y) Seller intends to so terminate this
Agreement, and (iii) Buyer shall not terminate this Agreement without the
consent of the requisite percentage of Financing Parties as set forth in the
Financing Documents.
17.2 Termination Following Initial Term. Either party may terminate this
Agreement as of the expiration of the Initial Term or the expiration of any
anniversary date thereafter by giving not less than thirty-six (36) months'
prior written notice to the other party.
17.3 Termination for Lack of Requirements. Buyer may terminate this
Agreement for lack of requirements for hydrogen following the later of (i)
Contract Year 10 and (ii) payment in full of all Senior Debt Obligations (as
defined in the Financing Documents) if Buyer's management reasonably determines
that Buyer's use of hydrogen at Buyer's Plant will permanently cease following
such determination and Xxxxx concurrently terminates the Product Supply
Agreement in accordance with Section 16.3 thereof. Such right of termination
shall be exercisable at any time following the later of (i) Contract Year 10 and
(ii) payment in full of all Senior Debt Obligations (as defined in the Financing
Documents) by Buyer giving Seller twelve (12) months prior written notice
thereof, and paying to Seller on the date such termination
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becomes effective the applicable Termination Payment set forth in Section
17.3.1. The Termination Payment shall be made by Buyer on the effective date of
termination. If the effective date of termination does not occur at the start of
a Contract Year, the Termination Payment will be determined by a straight-line
interpolation between the Termination Payments for the applicable two (2)
Contract Years. In no event shall termination of this Agreement under this
Section limit or effect Buyers obligations under Section 18.1.
17.3.1 Schedule of Termination Payments.
Years Remaining in Supply Period Termination Payment ($)
-------------------------------- -----------------------
10 54,394,500
9 50,579,500
8 46,412,500
7 41,862,000
6 36,892,500
5 31,549,500
4 25,864,000
3 19,759,000
2 13,094,000
1 7,750,000
17.4 Certain Events Related to Termination.
17.4.1 In the event the Product Supply Agreement between Seller and
Xxxxx is terminated or expires prior to its stated term, Buyer shall have the
right to assume each and every obligation of Xxxxx under the Product Supply
Agreement (but excluding past due monies) upon twenty (20) Days prior written
notice to Seller; provided, however, that, with respect to Xxxxx'x obligation to
supply Utilities under the Product Supply Agreement (i) in the event Buyer has
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access to or the ability to supply such Utilities. Buyer shall supply such
Utilities to Seller and (ii) in cases where Buyer does not have access to or the
ability to supply such Utilities to Seller, Seller shall use commercially
reasonable efforts to obtain such Utilities from an alternate source and Buyer
shall pay to Seller the additional costs and expenses incurred by Seller to
obtain such Utilities through an increase in the prices herein for such
Utilities. In the event Buyer does not exercise its rights in this Section
17.4.1, Seller shall have the right to (i) terminate this Agreement if it is not
reasonably practical for Seller to continue to operate the Facility or if such
continued operations would cause Seller to violate any Applicable Laws or
Permits or (ii) increase the price of hydrogen to be paid by Buyer hereunder to
compensate fully Seller for any costs or expenses incurred by Seller to continue
to operate the Facility to supply hydrogen under this Agreement.
18. ASSIGNMENT
18.1 Upon notice to Buyer, any or all of the Seller's rights, title and
interest under this Agreement (including without limitation any payments by
Buyer hereunder) may be assigned by Seller to an affiliate, a joint venture
company in which Seller or its affiliate is general partner or in which Seller
owns at least fifty percent (50%) of any equity, or to any bank, trust company,
insurance company, financial institution or other entity or groups thereof under
the terms of financing arrangements. Upon notice to Seller, any or all of the
Buyer's rights, title and interest under this Agreement (including without
limitation any payments to Buyer hereunder) may be assigned by Buyer to an
affiliate, a joint venture company in which Buyer or its affiliate is a general
partner or in which Buyer owns at least fifty percent (50%) of any equity, or
to any bank,
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trust company, insurance company financial institution or other entity or groups
thereof under the terms of financing arrangements (including the Financing
Parties). In the event of an assignment in the prior two (2) sentences, the
assignor shall execute for the benefit of the other party hereunder a guarantee
or similar agreement guaranteeing the performance of the obligations hereunder
by the assignee. If any Financing Party (or any nominee or assignee thereof)
succeeds to the rights of Buyer hereunder as a result of an exercise of
foreclosure under any collateral assignment hereof, any consensual arrangement
in lieu thereof or any other right set forth in the Financing Documents, Seller
will attorn to and recognize such successor as Buyer hereunder and such
successor shall be bound by the terms and conditions hereof (and the parties
shall execute any documents required to evidence such event). This Agreement
shall not otherwise be assignable or transferable by either Buyer or Seller
without the prior written consent of the other, which consent will not be
unreasonably withheld, and any attempted assignment or transfer without such
consent shall be void. All covenants and provisions of this Agreement shall bind
and/or inure to the benefit of the respective successors and permitted assigns
of the parties. In the event of the sale, lease or transfer of all or any
portion of Buyers Plant which utilizes hydrogen, Buyer will assign its interest
in this Agreement to such other entity who will assume all of Buyer's
obligations hereunder, subject to the rights contained in this Section 18.1.
19. NOTICE
19.1 Manner of Giving Notice. Unless herein provided to the contrary, any
notice called for in this Agreement shall be in writing and shall be considered
as having been given when delivered to the U.S. Postal Service, properly
addressed and with all postage charges
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prepaid by registered or certified mail, when delivered to an overnight courier
with proof of delivery or when faxed with proof of transmission, with all
charges prepaid, to either party at the address designated, or by actual
delivery to either party. Unless changed in writing, the addresses of the
parties are as follows;
Air Products and Chemicals. Inc.,
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Corporate Secretary
FAX No. (000) 000-0000
Port Xxxxxx Xxxxx Company, L.P.
Building _____
0000 Xxxxx Xxxxxxx
Xxxx Xxxxxx, Xxxxx 00000
Attention: Legal Department
FAX No. (000) 000-0000
with a copy to:
Financing Parties
[Address]
Attention: _____________________
FAX No. (__) ____________
Xxxxx Refining & Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Legal Department
FAX No. (000) 000-0000
19.2 Other Communications. All communications given under this Agreement
other than those notices and other writings specifically governed by Section
19.1, shall be given in a manner such that the communication is likely to be
received in a timely manner by a responsible representative of the receiving
party.
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19.3 Change in Addressee. Either party shall have the right at any time to
notify the other in writing of a different addressee to whom a particular type
of notice or other writing is to be sent under this Article.
20. INDEMNIFICATION
20.1 BUYER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES SHALL RELEASE SELLER,
AND ITS AGENTS, EMPLOYEES, AND AFFILIATES FROM AND SHALL INDEMNIFY, DEFEND AND
HOLD SELLER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES HARMLESS AGAINST ANY
COSTS, LOSSES, LIABILITIES, CLAIMS, EXPENSES, DEMANDS, ACTS, SUITS AND CAUSES OF
ACTION OF EVERY KIND AND NATURE (WHETHER IN CONTRACT, TORT OR OTHERWISE),
INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY'S FEES, ARISING FROM OR
RELATED TO PERSONAL INJURY OR PROPERTY DAMAGE INCURRED BY BUYER, ITS AGENTS,
EMPLOYEES, AND AFFILIATES IN CONNECTION WITH ACTIVITIES ARISING FROM OR RELATED
TO THIS AGREEMENT. THE PRODUCT SUPPLY AGREEMENT OR THE LEASE AGREEMENT,
REGARDLESS OF WHETHER SUCH INJURY OR DAMAGE IS CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF SELLER, ITS AGENTS, EMPLOYEES, AND AFFILIATES BUT EXCLUDING,
HOWEVER, PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SELLER, ITS AGENTS, EMPLOYEES, AND AFFILIATES OR ARISING
OUT OF OR RELATED TO ANY ENVIRONMENTAL MATTER FOR WHICH SELLER IS OBLIGATED TO
INDEMNIFY BUYER PURSUANT
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TO THE LEASE AGREEMENT, THIS INDEMNIFICATION SHALL APPLY NOTWITHSTANDING ANY
LIMITATIONS ARISING OUT OF WORKERS' COMPENSATION OR OTHER LIKE STATUTES AND
SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
20.2 SELLER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES SHALL RELEASE BUYER
AND ITS AGENTS, EMPLOYEES, AND AFFILIATES FROM AND SHALL INDEMNIFY, DEFEND AND
HOLD BUYER AND ITS AGENTS, EMPLOYEES, AND AFFILIATES HARMLESS AGAINST ANY COSTS,
LOSSES, CLAIMS, EXPENSES, DEMANDS, ACTS, SUITS AND CAUSES OF ACTION OF EVERY
KIND AND NATURE (WHETHER IN CONTRACT, TORT OR OTHERWISE), INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEY'S FEES, ARISING FROM OR RELATED TO PERSONAL
INJURY OR PROPERTY DAMAGE INCURRED BY SELLER, ITS AGENTS, EMPLOYEES, AND
AFFILIATES IN CONNECTION WITH ACTIVITIES ARISING FROM OR RELATED TO THIS
AGREEMENT, THE PRODUCT SUPPLY AGREEMENT OR THE LEASE AGREEMENT, REGARDLESS OF
WHETHER SUCH INJURY OR DAMAGE IS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF
BUYER, ITS AGENTS, EMPLOYEES, AND AFFILIATES BUT EXCLUDING, HOWEVER, PERSONAL
INJURY OR PROPERTY DAMAGE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF BUYER, ITS AGENTS, EMPLOYEES, AND AFFILIATES OR ARISING OUT OF OR RELATED TO
ANY ENVIRONMENTAL MATTER FOR WHICH BUYER IS OBLIGATED TO INDEMNIFY SELLER
PURSUANT TO THE LEASE AGREEMENT. THIS INDEMNIFICATION SHALL APPLY
NOTWITHSTANDING ANY LIMITATIONS
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ARISING OUT OF WORKERS' COMPENSATION OR OTHER LIKE STATUTES AND SHALL SURVIVE
TERMINATION OF THIS AGREEMENT.
20.3 At all times during the term of this Agreement, each party shall
obtain, at its own individual expense and with deductibles, casualty, public
liability, environmental liability, property damage and other types of insurance
which are normal and customary in such party's industry protecting such party
from liability arising out of operations in relation to this Agreement. Each
party shall cause such insurance policies to be endorsed to waive all express or
implied rights of subrogation against the other party and its agents, employees
and affiliates to effectuate the intent of this Article. Each party shall have
the right to self-insure, on a funded or unfunded basis, for all or any part of
the coverages required under this Section as it may solely determine, provided
(i) such levels of self insurance are consistent with good industry practice and
(ii) it maintains a net worth of at least $50 Million ($50,000,000) as
demonstrated by independently audited financial statements or other reasonably
verifiable means. For purposes of the foregoing net worth calculation, the net
worth of Air Products and Chemicals, Inc. shall be used in such calculation as
to Seller.
21. CONFIDENTIALITY
Each party (the "receiving party") shall hold in confidence and not
disclose to any third party (other than the Financing Parties all technical and
business information (the "Confidential Information") disclosed to the receiving
party from the other party (the "delivering party") or developed by the
delivering party for delivery to the receiving party, except (a) Confidential
Information which is in or becomes, without fault of receiving party, part of
the public domain;
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(b) Confidential Information which the receiving party can show was received by
it from an independent third party that is under no obligation to the
delivering party regarding the Confidential Information; (c) Confidential
Information which the receiving party can show was already in its possession at
the time the Confidential Information was made available to it, directly or
indirectly, from the delivering party; (d) Confidential Information required to
be disclosed by law or valid legal or regulatory process, following notice by
the receiving party to the delivering party of the requirement to disclose and
reasonable cooperation with any attempt by the delivering party to maintain the
confidentiality of such Confidential Information; or (e) Confidential
Information the disclosure of which is consented to by the other party. The
foregoing provisions shall continue in force and effect during the term of this
Agreement and for a period of five (5) years following any termination or
expiration of this Agreement. The parties agree that the terms and conditions
set forth in this Agreement shall be considered Confidential Information for
purposes of this Section. In the event any Confidential Information is disclosed
to a third party (including shareholders, direct and indirect providers of
equity capital, representatives, legal counsel, accountants, investment bankers,
commercial bankers or other professional consultants), in accordance with the
provisions hereof such third party shall agree in writing to be bound by the
provisions hereof and the receiving party and delivering party shall agree to
such other terms and conditions, including indemnification protection of the
delivering party, as reasonably requested by the delivering party.
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22. DISPUTE RESOLUTION
22.1 Arbitration. The parties shall endeavor to resolve any dispute
arising out of or relating to this Agreement by mediation under the rules and
guidelines of the American Arbitration Association. Any controversy or claim
arising out of or relating to this Agreement or the breach, termination or
validity thereof which remains unresolved forty-five (45) Days after appointment
of a mediator, shall be settled by arbitration by three arbitrators in
accordance with the rules and guidelines of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof.
22.2 Submission to Jurisdiction. Each of the parties hereto submits to the
jurisdiction of the courts of the State of New York and the courts of the United
States of America located in the State of New York over any suit, action or
proceeding with respect to this Agreement or the transactions contemplated
hereby or the enforcement of any arbitral award in connection therewith.
22.3 Forum Selection. Except for an arbitration proceeding under Section
22.1, any suit, action or proceeding with respect to this Agreement or the
transactions contemplated hereby, or the enforcement of any arbitral award in
connection therewith, may be brought only in the courts of the State of New York
or the courts of the United States of America located in the State of New York,
in each case located in the Borough of Manhattan, City of New York, State of New
York. Each of the parties hereto waives any objection that it may have to the
venue of such suit action or proceeding in any such court or that such suit,
action or proceeding in such court was brought in an inconvenient court and
agrees not to plead or claim the same.
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22.4 Appointment of Agent for Service of Process. Each parry shall take
any and all action as may be necessary to appoint and maintain an agent in the
State of New York for service of process so long as this Agreement is in effect.
In the event a party does not already maintain such an agent, such party hereto
irrevocably appoints CT Corporation, at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
as its authorized agent in the State of New York upon which process may be
served in any suit, action or proceeding with respect to this Agreement or the
transactions contemplated hereby, and agrees that service of process upon such
agent, and written notice of said service to such party by the person serving
the same to the address provided in Article 19, shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
23. GENERAL PROVISIONS
23.1 Entire Agreement; etc. This Agreement, including all exhibits
incorporated herein by reference, constitutes the entire agreement between the
parties hereto, supersedes all previous agreements and understandings, whether
oral or written, relating to the subject matter hereof, and may not be changed
or modified orally.
23.2 Headings. The headings used in this Agreement are for reference
purposes only and do not constitute substantive matter to be considered in
construing the terms of this Agreement.
23.3 Governing Law. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of New York.
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23.4 Modification. This Agreement, including the Exhibits hereto, may be
amended or modified from time to time only by an instrument in writing signed by
both parties, and shall not be modified by any course of performance, course of
conduct or usage of trade.
23.5 Severability. In the event that any provision of this Agreement shall
be held invalid or unenforceable under the laws of the State of New York, or any
municipality or governmental entity whose substantive laws may apply to this
Agreement, or under any rules or regulations promulgated by any governmental
authority thereof, the remainder of this Agreement or the application of the
provisions hereof to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, The remedies set
forth herein are exclusive of any remedy available by operation of law or
equity.
23.6 Conflicts. In the event of any conflict between this Agreement and
any Exhibit or attachment hereto that is not reconcilable, the provisions of
this Agreement shall apply.
23.7 Waiver. No waiver by Buyer or Seller of any default of the other
party under this Agreement will operate as a waiver of any subsequent default,
whether of a like or different character.
23.8 Equitable Adjustment. If and to the extent that any court or
governmental authority of competent jurisdiction holds any part of provisions of
this Agreement to be invalid or unenforceable, the parties will equitably adjust
the provisions of this Agreement with a view toward effecting its purposes; such
holding will not affect the validity or effectiveness of the other provisions of
this Agreement, which will remain in full force and effect.
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23.9 Exhibits. Each Exhibit referred to in this Agreement is incorporated
into this Agreement and made a part hereof by such reference. All obligations of
any party under any such Exhibit will be considered as obligations under this
Agreement.
23.10 Preparation. Drafting and negotiations of this Agreement have been
participated in by each party hereto, and not by either party to the exclusion
of the other and for all purposes this Agreement shall be deemed to have been
drafted jointly by the parties.
23.11 Execution. This instrument may be executed in separate original
counterparts but which will constitute one and the same Agreement.
23.12 Liquidated Damages not a Penalty. The parties acknowledge and agree
that in each instance where liquidated damages are provided for as the remedy of
the non-defaulting party in this Agreement, such party's actual damages are
difficult to measure, such liquidated damages are reasonable compensation to the
non-defaulting party for its damages and such liquidated damages are not a
penalty. Nothing set forth in this Agreement shall limit or effect either
party's right to assert an action for price or payment for Utilities or hydrogen
described hereunder.
23.13 Cooperation for Financing. Each party agrees to cooperate with the
other party in its efforts to obtain financing by executing any consents or
similar agreements or providing information reasonably necessary by such party
to obtaining financings, subject to compliance with Article 21 hereof. Such
cooperation would include, to the extent necessary, a party's assignment to such
lenders of this Agreement and accommodation of lender's reasonable requests
regarding performance of any obligations hereunder.
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23.14 Relationship of the Parties. Noting in this Agreement shall be
deemed to constitute either parry hereto a partner, joint venturer, agent or
legal representative of the other party or to create any fiduciary relationship
between or among the parties. This Agreement is intended solely for the benefit
of Seller and Buyer and their respective affiliates and is not intended to
confer any benefits upon, or create any rights in favor of any other entity or
person, except that the Financing Rates shall have the rights specifically set
forth in Sections 13.3 and 17.1 and any assignee of either party shall have the
rights and obligations and be bound by the terms and conditions set forth herein
upon assignment in accordance with Article 18 hereof.
23.15 Interpretation of Certain Terms. In this Agreement, the singular
shall include the plural and the masculine shall include the feminine and
neuter, as the context requires, and "include," "includes" and "including" shall
mean "include[includes][including], without limitation.
24. REPRESENTATIONS
24.1 Representations by Buyer. Buyer represents and warrants to Seller as
of the Effective Date that:
24.1.1 Buyer is a limited partnership duly formed and validly
existing under the laws of the State of Delaware; Buyer has the power and
authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged in; and Buyer is duly qualified to do business
in each jurisdiction in which the character of the properties owned by it
therein or in which the transaction of its business makes such qualification
necessary.
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24.1.2 The execution, delivery and performance by Buyer of this
Agreement has been duly authorized by all necessary corporate action and does
not and will not: (i) require any further consent or approval of the management
of Sabine River Holding Corp., a Delaware corporation, or of Buyer's management
or Board of Directors; (ii) contravene Buyer's certificate of limited
partnership, agreement of limited partnership or other organizational or
governing documents of Buyer; (iii) violate any provision of any Applicable Law
presently in effect having applicability to Buyer; (iv) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any indenture or loan or credit agreement or any other agreement lease or
instrument to which Buyer is a party or by which it or its properties may be
bound or affected; or (v) result in, or require, the creation or imposition of
any lien, upon or with respect to any of the properties now owned by Buyer,
except, in each case, for such matters for which noncompliance with the
foregoing would not have a material adverse effect on Buyer and except in the
case of (v) for Permitted Liens as defined in the Financing Documents.
24.1.3 This Agreement is the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
moratorium, insolvency or other similar laws affecting creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
24.2 Representation by Seller. Seller represents and warrants to Buyer as
of the Effective Date that:
24.2.1 Seller is a corporation duly formed and validly existing
under the laws of Delaware; Seller has the power and authority to own its assets
and to transact the business in
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which it is now engaged or proposed to be engaged in; and Seller is duly
qualified to do business in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
24.2.2 The execution, delivery and performance by Seller of the
Agreement has been duly authorized by all necessary corporate action and does
not and will not: (i) require any further consent or approval of the management
or the Board of Directors of Seller; (ii) contravene Seller's certificate of
incorporation, by-laws or other organizational or governing documents of Seller;
(iii) violate any provision of any Applicable Law presently in effect having
applicability to Seller; (iv) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the Seller
is a party or by which it or its properties may be bound or affected; or (v)
result in, or require, the creation or imposition of any lien, upon or with
respect to any of the properties now owned by Seller, except, in each case, for
such matters for which non-compliance with the foregoing would not have a
material adverse effect on Seller.
24.2.3 This Agreement is the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
moratorium, insolvency, or other similar laws affecting creditors rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
25. DEFINITIONS
Except as otherwise herein provided, the following words and/or terms as
used hereunder shall have the following meaning:
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25.1 "Agreement" means this agreement dated the first date set forth
herein between Seller and Buyer, as may be amended from time to time.
25.2 "Applicable Law" means all laws, treaties, ordinances, judgments,
decrees, injunctions, writs, orders and stipulations of any court, arbitrator or
governmental agency or authority, and statutes, rules, regulations, orders and
interpretations thereof of any federal, state, county, municipal, regional,
environmental or other governmental body, instrumentality, agency, authority,
court or other body applicable from time to time to either parties' facilities,
or the operation or maintenance, or the performance of any obligations by either
party under this Agreement or any other agreement entered into in connection
herewith.
25.3 "Base Facility Charge" or "BFC" shall have the meaning given such
term in Section 7.1.
25.4 "Bonus/Liquidated Damage Account" shall have the meaning given such
term in Section 9.1.
25.5 "Buyer" shall have the meaning given such term in the introductory
paragraph of this Agreement.
25.6 "Buyer's Plant" shall have the meaning given in the first recital.
25.7 "Buyer's Pro Rata Share" shall mean one hundred percent (100%) of any
charge, expense, cost, fee or tax that is calculable or measurable, directly or
indirectly, by the hydrogen sold to Buyer, and in any other case, (81.13%) of
such charge, expense, cost, fee or tax.
25.8 "Xxxxx" shall mean Xxxxx Refining & Marketing, Inc., or its successor
and permitted assigns.
-57-
25.9 "Xxxxx'x Plant" shall mean the facilities and equipment owned and
operated by Xxxxx in Port Xxxxxx, Texas.
25.10 "Commencement Date" shall have the meaning given such term in
Section 2.1.
25.11 "Confidential Information" shall have the meaning given such term in
Article 21.
25.12 "Contract Year" mean the period commencing on the Commencement Date
and ending twelve (12) months thereafter and each twelve (12) month period
thereafter.
25.13 "Day" means a twenty-four (24) hour period commencing at midnight
(12:00 am) local time on one day and ending at the same time on the following
day and such day shall bear the date of the day on which it commences.
25.14 "Dedicated Hydrogen Charge" shall have the meaning given such term
in Section 7.2.
25.15 "Dedicated Hydrogen Quantity" shall have the meaning given such term
in Section 5.1.
25.16 "delivering party" shall have the meaning given such term in Article
21.
25.17 "DHC" shall have the meaning given such term in Section 7.5.
25.18 "Effective Date" is defined as set forth in the introductory
paragraph of this Agreement.
25.19 "EGM" and "EGM System" shall have the meaning given such terms in
Section 4.1.4.
-58-
25.20 "Facility." shall have the meaning given in the first WHEREAS
clause.
25.21 "Facility Site" shall have the meaning given such term in Section
1.1.
25.22 "Financing Documents" means all documents entered into by Buyer
evidencing or securing the financing of Buyer's Plant dated on or about 15
August 1999.
25.23 "Financing Parties" means any secured parties designated as such in
the Financing Documents and any trustee or agent acting on their behalf.
25.24 "Force Majeure" shall have the meaning given such term in Section
13.1.
25.25 "Hydrogen Delivery Point" shall have the meaning given to such term
in Section 3.1.
25.26 "Hydrogen Non-Consumption Charge" shall have the meaning given such
term in Section 7.5.
25.27 "Hydrogen Order Rate" shall have the meaning given such term in
Section 5.5.
25.28 "Independent Engineer" means Xxxxxx & Xxxxx Inc., or a successor
thereto appointed pursuant to the Financing Documents.
25.29 "Initial Term" shall have the meaning given such term in Section
2.1.
25.30 "Internal Hydrogen Production" shall have the meaning given such
term in Section 5.1.
25.31 "Lease Agreement" shall mean that certain Lease Agreement between
Seller and Xxxxx dated the date hereof, as it may be amended from time to time.
-59-
23.32 "Minimum Quantity of Hydrogen shall have the meaning given such term
in Section 5.3.
25.33 "MSCF" means one thousand SCF.
25.34 "MMSCFD" means one million SCF per Day.
25.35 "On-Steam Factor" shall have the meaning given such term in Section
9.1.
25.36 "Permits" means any waiver, exemption, variance, franchise, permit,
authorization, license or similar order of or from any federal, state, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over either party's
facility, or the performance of either party of any obligation under this
Agreement or any other agreement in connection herewith.
25.37 "Pipeline Hydrogen" shall have the meaning given such term in
Section 5.4.
25.38 "Pipeline Hydrogen Charge" shall have the meaning given such term in
Section 7A.
25.39 "Pipeline Network" means the pipeline system connected to the
Facility and constructed, owned or operated by Seller or its affiliates, which
is used to transport hydrogen in Texas.
25.40 "Product Supply Agreement" shall mean that certain Product Supply
Agreement between Seller and Xxxxx dated the date hereof as it may be amended
from time to time.
25.41 "Property Tax Agreements" shall have the meaning given such term in
Section 12.2.
-60-
25.42 "Prudent Industry Standards" means those practices, methods,
equipment, specifications and standards of safety and performance, as the same
may change from time to time, as are commonly used in facilities in the United
States of a type and size similar to the facility in question.
25.43 "Psig" means pounds per square inch gauge.
25.44 "receiving party" shall have the meaning given such term in Article
21.
25.45 "Regulation" shall have the meaning given such term in Section 11.1.
25.46 "Rfa" shall have the meaning given such term in Exhibit I.
25.47 "SCF" shall have the meaning given such term in Section 4.1.3.
25.48 "SCFD" means an instantaneous rate of flow of a gas which would be
equivalent to one SCF of that gas if continued for a twenty-four (24) hour
period.
25.49 "Seller" shall have the meaning given such term in the introductory
paragraph of this Agreement.
25.50 "Seller's Hydrogen Volume" shall have the meaning given such term in
Section 5.3.2
25.51 "Spill Stream Hydrogen" shall have the meaning given such term in
Section 5.1.
25.52 "Start-up Damages Cap" shall mean an aggregate amount equal to One
Million One Hundred Fifty-five Thousand Dollars ($1,155,000).
25.53 "Start-up Date" shall mean 6 December 2000.
-61-
25.54 "Supplemental Hydrogen" shall have the meaning given such term in
Section 5.2.
25.55 "Supplemental Hydrogen Charge" shall have the meaning given such
term in Section 7.3.
25.56 "Supply Period" shall have the meaning given such term in Section
2.1
25.57 "Turnback Hydrogen" shall have the meaning given such term in
Section 5.3.
25.58 "Two Contract Year Minimum Quantity of Hydrogen" shall have the
meaning given such term in Section 5.3.
25.59 "Two-Year Minimum Purchase Obligation" shall have the meaning given
such term in Section 5.3.
-62-
25.60 "Utilities" shall have the meaning given such term in Section 12 of
the Product Supply Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the Effective Date.
AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ Xxx X. McGilad
-----------------------------
Title: Vice President
PORT XXXXXX XXXXX COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
EXHIBIT A
TECHNICAL DESCRIPTION
1.1 Facility Design Basis
Hydrogen shall be produced from the conversion of natural gas via a steam
methane reformer (SMR) and a high temperature shift (HTS) reactor.
Purification of the hydrogen shall be accomplished by a pressure swing
adsorption (SMR PSA) unit. In conjunction with the SMR, a spill gas stream
from Buyer's hydrotreaters will be purified in a separate H(2) PSA
(Hydrotreater Spillstream System).
Power shall be produced from a GE Frame 6B gas turbine. Steam will be
produced from waste heat generated in the SMR and the Frame 6B.
1.2 Production Basis
1.2.1 Product Hydrogen
The steam methane reformer will be capable of producing approximately 100
MMSCFD H(2) (80 MMSCFD dedicated to Buyer) when supplied with natural gas
at 500 psig minimum and approximately 79 MMSCFD when supplied with natural
gas at 450 psig. Up to an additional 6.0 MMSCFD H(2) (approximately) will
be produced from the purification of Buyer's Gulfining Units (GFU
241/242/243/244) hydrotreater spill gas in the Hydrotreater Spillstream
System.
Hydrogen from the SMR will be compressed via two identical compressors,
each sized to deliver 80 MMSCFD H(2) to 850 psig (minimum) at the
Facility's battery limits. Each compressor will be designed for two stages
with one cylinder per stage. Each compressor will be dedicated for
hydrogen service (i.e. not multiservice).
Hydrogen produced from the purification of Xxxxx'x hydrotreater spill
stream (via the Spill PSA) will be compressed to meet the HCU 942 pressure
requirements. When supplied with 8.9 MMSCFD of feed gas in accordance with
Exhibit D, the spill stream system will produce approximately 5.0 MMSCFD
of product hydrogen plus 3.9 MMSCFD of purge gas to be delivered to Xxxxx
as fuel.
1.2.2 Steam
Steam from the Facility will be delivered to Xxxxx'x 650 psig high
pressure steam system. Steam production is a function of the gas turbine's
performance and the hydrogen production rate. Net steam export quantities
to Xxxxx at the full hydrogen production rate are anticipated to be:
Turbine New(1) Average(2) Maximum(3)
Intake Temp. and Clean Degradation Degradation
------------ --------- ----------- -----------
32(degrees)F 470,000 lbs/hr 470,000 lbs/hr 463,000 lbs/hr
65(degrees)F 445,000 lbs/hr 440,000 lbs/hr 430,000 lbs/hr
93(degrees)F 460,000 lbs/hr 459,000 lbs/hr 455,000 lbs/br
(1) "New" denotes the first month of gas turbine operation following
major overhauls
(2) "Average" denotes the performance of the gas turbine averaged
over six years
(3) "Maximum" denotes the last month of gas turbine operation prior
to major overhauls
The steam export quantities shown above are based on installation of a
steam turbine generator. Xxxxx may request additional steam from the
Facility, to the extent available, up to a maximum of 518,000 lbs/hr.
A-1
Condensate from the Facility xviii not be delivered to Xxxxx, nor xxxx
Xxxxx supply condensate to the Facility.
1 2.3 Product Power
Gross power production for Xxxxx'x consumption is anticipated to vary as a
function of ambient temperature and the turbine maintenance cycle as
follows:
Turbine New Average Maximum
Intake Temp. and Clean Degradation Degradation
------------ --------- ----------- -----------
32(degrees)F 43,600 kw 42,800 kw 41,730 kw
65(degrees)F 38,300 kw 37,200 kw 36,220 kw
93(degrees)F 34,630 kw 33,600 kw 32,570 kw
The combustion turbine generator (CTG) will be tied to Xxxxx'x No. 6 Power
Plant switchgear (PP6). The Facility will be comprised of a 13.8kVmain bus
system with a radial tie to Xxxxx. This radial tie, about 4,000' in
length, will be accomplished via 9-11c 500 kcmil overhead insulated cable
and terminated at Xxxxx'x substation # 6. The cable will be installed and
provided for termination by Xxxxx. Termination at the Facility will be by
Seller. The cable will transition from an overhead arrangement to cable
trays at the Facility boundary limit. The 13.8kV switchgear will be
comprised of three (3) circuit breakers, one for the tie line to Xxxxx
(52I), the second for the 47MVA CTG (52G) and the third for the Facility
(52T). Power to the Facility, fed from the 13.8kV switchgear, will be
transformed from 13.8kV to 4.16kV via a 15MVA transformer.
If, while 52I is closed with Seller exporting power to Xxxxx. Xxxxx
separates from the utility (Entergy), an island would be created comprised
of Xxxxx'x Plant and the Facility. Xxxxx will provide Seller with circuit
breaker contacts that indicate separation from the utility grid. Seller
will utilize this contact to switch the CTG from synchronous to
isochronous modes. Seller will continue to operate under the line VAR
control and isochronous mode.
The WATT and VAR controllers shall be resident in the DCS. These
controllers, in turn, will adjust the setpoint resident within the EX2000
by means of hardwired raise/lower pulse signals. The Facility would
normally operate at MW and MVAR setpoints for the intertie. MW and MVAR at
the intertie to Xxxxx will be continuously monitored via transducers and
input to their respective DCS controllers. When the CTG is on line, any
changes within the Facility power factor-such as due to the operation of
the synchronous motor drives for the compressors-will result in changes to
the power factor at the intertie to Xxxxx and will be compensated for by
excitation to the CTG.
Xxxxx utilizes a load shedding scheme based on underfrequency relays.
Seller will not be subject to load shedding by Xxxxx. During normal
operation, with the CTG on line, power will be exported to Xxxxx at a
power factor greater than or equal to 0.9 lagging. In the event that the
CTG is off line, power may be imported to the Facility at a power factor
greater than or equal to 0.9 laaging. Seller shall operate the Facility to
produce and deliver power at reasonably uniform rates and shall not be
subject to dispatch and control by Xxxxx.
1.2.4 Product Fuel
Purge gas produced from the purification of Xxxxx'x hydrotreater spill gas
will be exported to Xxxxx as fuel to Xxxxx'x fuel gas system. Based on the
normal composition shown in Exhibit D, the process design purge gas flow,
pressure and temperature at the Facility's battery limits will be:
Min. Normal Max.
---- ------ ----
Flow 1.8 MMSCFD 3.9 MMSCFD 4.5 MMSCFD
Pressure -- 95 psig 110 psig
Temperature 56(degrees)F 100(degrees)F 120(degrees)F
A-2
The design mechanical pressure and temperature will be 250 psig and
150(degrees)F.
1.3. Hydrogen Compression
In the event of an SMR outage, each compressor will have the ability to
take pipeline hydrogen and compress it to 850 psig (minimum) for supply to
Buyer. In the event of the HCU 942 outage, Seller may export hydrogen to
the pipeline.
1 .4 Turndown and Operability Scenarios
The normal turndown of the SMR is to 80% of hydrogen flow with some loss
in efficiency. The maximum turndown of the SMR is to approximately 40% of
hydrogen flow with reduced efficiency.
Hydrogen production from the Facility will be based on the order rate
requested by Buyer. The Facility will be designed to be pressure
controlled via "load-following" of Buyer's hydrogen needs within plus or
minus 5% of the order rate. Net steam export will be allowed to vary as a
function of hydrogen production without exceeding the maximum amount of
470,000 lbs/hr. In the event of a gas turbine outage, steam and hydrogen
production will turndown. Hydrogen production will be supplemented by the
hydrogen pipeline.
1.5 Meteorological Conditions
The table below summarizes the temperature basis:
-------------------------------------------------------------------------
Process Design Mechanical Design
-------------------------------------------------------------------------
Min.(degrees)F Min.(degrees)F Min.(degrees)F Min.(degrees)F
---------------------------------------------------------------------------------------------
Winterizing 20 --- 20 ---
---------------------------------------------------------------------------------------------
Ambient Average(3) 56 86 N/A N/A
---------------------------------------------------------------------------------------------
Equipment Data Sheets
Ambient Temp.(1) 20 104 20 104
Design Metal Spec.(2) -20 --- -20 ---
---------------------------------------------------------------------------------------------
Pipe Expansion 20 --- 20 104
---------------------------------------------------------------------------------------------
Air Cooler Design 20 l00(4) 20 104
---------------------------------------------------------------------------------------------
Cooling Tower
Wet Bulb 82.5 --- --- ---
Dry Bulb 95 --- --- ---
---------------------------------------------------------------------------------------------
Air Compressor 20 100 20 104
Relative Humidity 100 100 100 100
---------------------------------------------------------------------------------------------
(1) Used for mechanical hardware, electronics, pump windings, etc.
(2) Minimum design metal temperatures for data sheets
(3) Used for process heat balance calculations
(4) Based on 95(degrees)F ambient and 5(degrees)F air recirculation margin
The normal atmospheric pressure is: 14.7 psia (760 mmHg)
True elevation for the Facility is: 5 ft above sea level
Seismic zone for Port Xxxxxx: 0 per UBC 1997
The wind design shall be:
Prevailing Direction: SE
A-3
Average Velocity, mph: 10
Dispersion or flare design velocity, mph: 17
Mechanical Design, mph: 120
The wind rose data shall be:
Direction: True N NE E SE S SW W NW
% of Time: 11 4 13 12 41 7 6 6
The basic wind speed to be used for structural design shall be based on
120 mph for 100 year recurrence per ASCE 7-95 using the exposure category
C and importance factor of 1.05
Wind pressure for various height zones shall be as specified in ASCE 7-95.
Rainfall for sewer sizing shall be:
One hour maximum, in: 3
24 hour maximum, in: 10
Fire zone rate, gpm 6,000
Water Run-off Design Factors:
Paved areas: F = 1.0
Unpaved areas: F = 0.6
1.6 Scope of Supply
Seller will design, procure, install, own, operate and maintain the
Facility. The Facility will include the equipment and services described herein,
although Seller retains the right to make design modifications as long as they
do not adversely affect the performance of the plant. The design of the Facility
will be in accordance with all applicable health, safety, design and fire codes.
Equipment List
Seller will furnish the equipment and materials for the Facility as
described below.
C-103 ID Fan
CM-103 Motor
C-105 Condensing Steam Turbine
CM-105 Condensing Steam Turbine Motor
CG-105 Condensing Steam Turbine Generator
Main Lube Oil Pump
Auxiliary Lube Oil Pump
Lube Oil Cooler
Gland Steam Condenser
Lube Oil Filter
E-130 Surface Condenser
X- 108 A/B/C Vacuum System
C-250 A/B Product H(2) Compressors
S-250-A1 Suction Volume Bottle
S-250-A2 Suction Volume Bottle
S-250-A3 Discharge Volume Bottle
S-250-A4 Discharge Volume Bottle
V-256A/B Lubricator Day Tanks
P-252A/B Lubricator Pumps
A-4
CM-250A/B H(2) Product Comp. Motors
C-255/C-220 Spill Gas Product H(2) Compressor
(Stage 1 and Stage 2) and Purge Gas CO Compressor
S-255-1 H(2) 1st Stage Suction Bottle
S-255-2 H(2) 1st Stage Discharge Bottle
S-255-3 H(2) 2nd Stage Suction Bottle
S-255-4 H(2) 2nd Stage Discharge Bottle
F-221 Coolant Strainer for Stage 1
F-222 Coolant Strainer for Xxxxx 0
X-000 Xxxxx Gas Compressor Stage 1 and Stage 2
S-220-1 1st Stage Suction Bottle
S-220-2 1st Stage Discharge Bottle
S-220-3 2nd Stage Suction Bottle
S-220-4 2nd Stage Discharge Bottle
V-220 C-255/C-220 Lubricator Day Tank
P-220 C-255/C-220 Lube Pump
CM-220 Spill Gas MS Comp. Motor
C-500 Gas Turbine
CM-500 Gas Turbine Starting Motor
CG-500 Gas Turbine Generator
Gas Turbine Building Case
Strainers for G.T.
CC-l Steam Generation Coil #1
CC-2 Mixed Feed Preheat Coil
CC-3 Steam superheat Coil
CC-4 Steam Generation Coil #2
CC-5 Steam Generation Coil #3
CC-6 BFW Preheat Coil
E-103 Process Gas Boiler
E-104 Feed Preheater II
E-105 Kettle Boiler
X-000 XXX Xxxxxxxxx
X-000 Feed Preheater I
F-108 Deaerator Water Heater
E-110 A/B Process Gas Trim Cooler
E-129 Blowdown Cooler
E-220 Purge Gas Comp. Inter-Cooler
E-221 Purge Gas Comp. Discharge-Cooler
E-255 Spill Product H(2) Comp. Inter-Cooler
E-256 Spill Gas H(2)Comp. After Cooler
F-220 Purge Gas Comp. Inlet Filter
F-255 Spill Gas Product H(2) Comp. Suction Filter
F-256 Spill Gas Product H(2) Comp. After Filter
F-501 Gas Turbine Fuel Filter
X-000 Xxxxxxxx
X-000 Purge Gas Comp. Discharge Coalescer
A-5
P-101A/B/C BFW Pumps w/Motors
P-102A/B BFW Circulation Pumps w/Motors
P-121A/B Condensate Pumps w/Motors
E-149A/B Seal Flush Coolers
E-150A/B Seal Flush Coolers
E-151A/B Seal Flush Coolers
P-931A/B Demin Water Transfer Pumps
P-991A/B Sanitary Sewer Pumps
P-992A/B Dirty Water Sump Pumps
P-993A/B Dirty Water Sump Pumps
P-994A/B Dirty Water Sump Pumps
P-115A/B Aqueous Ammonia Pumps
V-101 Feed Gas Separator
V-104 Hydrogenator
V-105 Feed Desulfurizer
V-107 Continuous Blowdown Drum
V-108 Steam Drum
V-109 H.T. Shift Reactor
V-112 Process Condensate Separator
V-113A/B PSA Surge Drums
V-114 Deaerator
V-115 Spill Gas PSA Surge Drum
V-116 Spill Gas K.O. Drum
V-129 Intermittent Blowdown Drum
V-132 Fuel Gas Separator
V-133 Oil Blowdown Drum
V-135 Aqueous Ammonia Tank
V-920 Air Receiver
V-922 Instrument Air K.O. Drum
V-931 Make-up Water Storage Tank
X-l01 PSA Xxxx
X-000 XXX Xxxx
X-000 XXXX Xxxxxxx
X-000 Steam Silencer
V-106A/B/C Chemical Dosing Unit
P-106A Neutralizing Amine Pump
P-106B Oxygen Scavenging Pump
P-106C Internal Treatment Pump
V-106A Neutralizing Amine Tank
V-106B Oxygen Scavenger Tank
V-106C Internal Treatment Tank
X-107 Vent Stack Tip
X-110 Spill Gas PSA Unit
A-6
X-135 NH, System Skid
V-136 Aqueous NH(3) Mixer
F-115A/B Aqueous Ammonia Filters
C-104A/B NH(3) Injection Blowers
E-119A/B Atomizing Air Heaters
X-901 Oil Removal Skid
K-251 H(2) Pipeline Common 2nd Coalescer
V-251 H(2) Pipeline Product Common Oil Absorber
F-251 H(2) Pipeline Product After Filter
X-902 Lube Oil Skid for C-255 /C-220
P-255 Main Oil Pump
P-256 Aux. Oil Pump
E-253 Lube Oil Exchanger
F-253 Lube Oil Filter
X-903 Lube Oil Skid for C-250A/B
P-250A/B Main Oil Pumps
P-251A/B Aux. Oil Pumps
E-252A/B Lube Oil Exchangers
F-252A/B Lube Oil Filters
X-904 Purge Panel for C-255 C-220
X-905 Unloader Panel for C-255/C-220
X-906 A/B Purge Panels for C-250A/B
X-907 A/B Unloader Panels for C-250A/B (By KTI)
X-921A/B Instrument Air Dryers
X-940 Flare
V-940 Flare K.O. Drum
X-950 Jacket Water Skid for C-250A/B
E-950 Jacket Coolant Exchanger
P-950 A/B Jacket Coolant Water Pumps
F-950A/B Jacket Coolant Water Supply Strainers
F-951 Jacket Coolant Water Side Stream Filter
V-950 Jacket Coolant Receiver
X-908 Accessory Skid for C-250A/B
E-250A Prod. H(2) Comp. Discharge Coolers
E-250B Prod. H(2) Comp. Discharge Coolers
F-250A/B Prod. H(2) Comp. Suction Filters
K-25OA/B Prod. H(2) Comp. Discharge Coalescers
A-7
X-920 LIN System
E-920A/B/C/D Nitrogen Vaporizers
V-921 Liquid Nitrogen Tank
PBV Control Skid
PBU
Analyzers include but are not limited to the following:
Analyzer
O(2) in Flue Gas
Low 0(2) in Analyzer Building
CO in PSA Equalization Header
CO in Hydrogen product (redundant)
N(2) in Hydrogen product (redundant)
Specific Gravity of PSA tail gas
Conductivity of BFW make-up
CH(4) slip in reformer outlet
A regulatory agency approved safety PLC will be provided to perform Burner
Management System (BMS) and other critical safety functions. A BMS system
will be designed to monitor conditions associated with the fuel system,
flame and draft in the reformer. This system will be in compliance with
NFPA requirements.
The following detectors will be provided:
Carbon Monoxide detectors at the reformer penthouse
at the analyzer building
at the PSA skid
Ultraviolet detectors at the PSA skid
at the reformer penthouse
Combustible Gas detector at the reformer penthouse
at the analyzer building
A-8
EXHIBIT B
[INTENTIONALLY BLANK]
B-1
EXHIBIT C
[INTENTIONALLY BLANK]
C-1
EXHIBIT D
UTILITIES AND SERVICES TO BE SUPPLIED BY XXXXX
Unless otherwise stated, the following Utilities shall be supplied by Xxxxx to
Seller at no cost to Seller for the commissioning, testing, start-up of the
Facility. Beginning on the Commencement Date of the Product Supply Agreement and
for the remainder of the Supply Period, Seller will purchase from Xxxxx, unless
otherwise stated, the following Utilities at the prices defined herein and Buyer
shall reimburse Seller hereunder for the costs and expenses of such Utilities.
Utilities are to be supplied to the Delivery Points defined in Exhibit E herein
by Xxxxx.
1.0 Cooling Water
Xxxxx shall provide approximately 15,540 gpm of cooling water to the
Facility's battery limits. The cooling water typically has the following
constituents at 10 cycles of concentration:
===================================================================
Characteristics Minimum Normal Maximum
-------------------------------------------------------------------
Feed Water pH 7.2
-------------------------------------------------------------------
Temperature (degrees)F 93 93
-------------------------------------------------------------------
Calcium Hardness as CaCO(3) ppm 82
-------------------------------------------------------------------
Magnesium Hardness as CaCO(3) ppm 50
-------------------------------------------------------------------
Total Hardness as CaCO(3) ppm 115
-------------------------------------------------------------------
Sodium as Na ppm 78
-------------------------------------------------------------------
Potassium as K mg/L
-------------------------------------------------------------------
Iron as Fe ppm 6.0
-------------------------------------------------------------------
Manganese as Mn mg/L
-------------------------------------------------------------------
Copper as Cu ppm 0.23
-------------------------------------------------------------------
Aluminum as Al mg/L
-------------------------------------------------------------------
Zinc as Zn mg/L
-------------------------------------------------------------------
Ammonia and Ammonium Ion as
NH(3) mg/L
-------------------------------------------------------------------
Methyl Orange (M)
Alkalinity as CaCO(3) ppm 56
-------------------------------------------------------------------
Phenolphahalein (P)
Alkalinity as CaCO(3) ppm 0
-------------------------------------------------------------------
Chloride as Cl ppm 295
-------------------------------------------------------------------
Sulfate as SO(4) mg/L
-------------------------------------------------------------------
Nitrate as NO(4) mg/L
-------------------------------------------------------------------
Orthophosphate as PO(4) ppm 32
-------------------------------------------------------------------
Total Phosphate as P0(4) mg/L
-------------------------------------------------------------------
Silica as SiO(2) ppm 88
-------------------------------------------------------------------
Total Dissolved Solids, TDS mg/L
-------------------------------------------------------------------
Total Suspended Solids, TSS mg/L 25
-------------------------------------------------------------------
Turbidity as NTU mg/L
-------------------------------------------------------------------
Oil and Grease mg/L
-------------------------------------------------------------------
D-1
===================================================================
Characteristics Minimum Normal Maximum
-------------------------------------------------------------------
Specific Conductance at
25(degrees)C uohms 802
-------------------------------------------------------------------
Xxxxxxxxx Index mg/L
-------------------------------------------------------------------
Chemical Oxygen Demand, COD mg/L
-------------------------------------------------------------------
Total Organic Carbon, TOC mg/L
-------------------------------------------------------------------
Free Chlorine Residual
as Cl(2) mg/L
-------------------------------------------------------------------
Total Sulfur as S0(4) ppm 140
-------------------------------------------------------------------
Tolyltriazole ppm 0.4
-------------------------------------------------------------------
Min. Normal Max.
---- ------ ----
Supply Pressure 60 psig 60 psig 80 psig
Temperature 56(degrees)F 88(degrees)F 93(degrees)F
The mechanical design pressure and temperature will be 80 psig and
150(degrees)F.
2.0 Boiler Feed Water Make-up
Xxxxx shall provide boiler feed water make-up to the Facility in
accordance with the following:
==================================================================
Boiler Feed Water
------------------------------------------------------------------
pH 7.5-10
------------------------------------------------------------------
Nonvolatile TOC, mg/LC less than 0.5
------------------------------------------------------------------
Oily Matter, MG/L less than 0.5
------------------------------------------------------------------
Specific Conductance at 25(degrees)C, umhos less than 10
------------------------------------------------------------------
Alkalinity, ppm less than 0.15
------------------------------------------------------------------
Total Sulfur as SO(4), ppm less than 0.5
------------------------------------------------------------------
Chloride as Cl, ppm less than 0.5
------------------------------------------------------------------
Total Hardness as CaCO(3), ppm less than 0.1
------------------------------------------------------------------
Total Calcium Hardness as CaCO(3), ppm less than 0.05
------------------------------------------------------------------
Total Magnesium Hardness as CaCO(3), ppm less than 0.05
------------------------------------------------------------------
Total Copper as Cu, ppm less than 0.015
------------------------------------------------------------------
Total Iron as Fe, ppm less than 0.02
------------------------------------------------------------------
Sodium as Na, ppm less than 0.24
------------------------------------------------------------------
Silica as SiO(2), ppm less than 0.20
==================================================================
Conditions at the Facility's Battery Limits:
Min. Normal Max.
---- ------ ----
Pressure 54 psig 60 psig 85 psig
Temperature 56(degrees)F 100(degrees)F 104(degrees)F
Flowrate N/A 1,200 gpm 1,350 gpm
3.0 Filtered Water
Xxxxx shall provide filtered water to the Facility for utility purposes.
D-2
The water quality shall be as shown below:
Conditions at the Facility's Batter Limits:
Min. Normal Max.
---- ------ ----
Pressure 30 psig 60 psig 85 psig
Temperature 56(degrees)F 86(degrees)F 104(degrees)F
Flowrate N/A 0 gpm nominal
The mechanical design pressure and temperature will be 150(degrees)F and
150 psig.
4.0 Firewater
3000 gpm delivered at 121 psig. The mechanical design pressure will be 150
psig.
5.0 Potable Water
Xxxxx will supply approximately 280 gpd of potable water to the Facility's
battery limit:
Min. Normal Max.
---- ------ ----
Pressure 30 psig 60 psig 80 psig
Temperature 56(degrees)F 86(degrees)F 86(degrees)F
The mechanical design temperature and pressure will be 150(degrees)F and
150 psig.
6.0 Nitrogen
Xxxxx will provide gaseous nitrogen to the Facility's battery limit for
continuous purging and instrument air backup. Nitrogen shall meet 99.9%
purity (minimum) and -40(degrees)F dew point. Approximately 65 SCFM will
be required for normal continuous purge requirements. Seller will provide
nitrogen for startup, shutdown, and emergencies to the extent required
beyond the quantities listed below.
Min. Normal Max.
---- ------ ----
Flowrate 3900 SCFH 3900 SCFH 8000 SCFH
Pressure 190 psig 225 psig 600 psig
Temperature 56(degrees)F 71(degrees)F 100(degrees)F
The mechanical design temperature and pressure will be 150(degrees)F and
660 psig. A process meter will be provided by Seller.
7.0 Plant Air
Xxxxx will provide water saturated, oil-free instrument air at the
Facility's battery limits.
Min. Normal Max.
---- ------ ----
Pressure 80 psig 80 psig 125 psig
Temperature 56(degrees)F 100(degrees)F 104(degrees)F
Flowrate 710 SCFM 710 SCFM 1100 SCFM
The mechanical design temperature and pressure will be 150(degrees)F and
150 psig. Seller will install equipment to dry the plant air.
D-3
8.0 Wastewater
Compressor blowdowns, steam blowdowns, gas turbine water wash waste, plant
air knock-out drum and storm water runoffs from diked areas will be pumped
to Xxxxx'x dirty water system. An oil-water separator is not included.
Steam blowdowns will be cooled to 100(degrees)F via the blowdown cooler
(E129). The pressure and temperature of the wastewater shall be as
follows:
Min. Normal Max.
---- ------ ----
Pressure N/A 95 psig __ psig
Temperature 56(degrees)F 71(degrees)F 100(degrees)F
Stormwater runoff from non-diked areas will be gravity fed to Xxxxx'x
stormwater system. Trace liquids knocked out of the refinery fuel stream
will be directed to Xxxxx'x sourwater system. Sanitary wastes will be
pumped to Xxxxx'x dirty water system.
9.0 Back-up Power Supply
In the event of a gas turbine generator outage and during Facility
startup, Xxxxx will supply to the Facility 13.8 kV, 60 Hz, 3 phase power.
Maximum voltage drop to be to 13.2 kV. Delivery rates shall be:
Normal Maximum
------ -------
8,000 KW 13,000 KW
10.0 Feed and Fuel Streams
10.1 Natural Gas
Natural gas will be supplied by Seller.
Natural gas will be used as feedstock and trim fuel for the Facility and
as fuel for the gas turbine generator. It is understood that the design
and performance of the Facility is based on the following:
Composition: 94.5 mol% CH(4)
2.4% C(2) H(6)
0.5% C(3)H(8)
0.1% i-C(4)H(10)
0.1% n-C(4)H(10)
0.5% n-C(6)H(14)
1.4% CO(2)
0.5% N(2)
4 ppmv H(2)S (max.)
4 ppmv Total Mercaptans (max.)
0 ppmv Olefins and Unsaturates
MW= 17.41
HHV = 1,039.5 Btu/SCF
Min. Normal Max.
---- ------ ----
Pressure 500 psig 525 psig 540 psig
Temperature 56(degrees)F 71(degrees)F 86(degrees)F
Flowrates
(MMBtu/hr,HHV) N/A 2208 2750
D-4
The Facility will be capable of operating at reduced hydrogen production
rates at a natural gas supply pressure of 450 psig. The mechanical design
pressure and temperature will be 600 psig and 150(degrees)F. A process
meter will be provided by Seller.
10.2 Refinery Fuel
Refinery fuel gas will be supplied by Xxxxx and purchased from Xxxxx by
Seller.
Xxxxx shall supply refinery fuel to be made available as fuel for the
Facility's burners. The refinery fuel composition, temperature and
pressure, supplied at Facility's battery limits will vary depending upon
the operation of Xxxxx'x refinery with typical composition to be as
follows:
Composition (typical):
Hydrogen 43.0 mol%
Methane 39.1 mol%
Ethane 6.5 mol%
Ethene 0.9 mol%
Propane 4.7 mol%
Propene 0.6 mol%
Butane 0.5 mol%
iso-Butane 0.8 mol%
1-Butene 0.1 mol%
n-Pentane 0.2 mol%
Hexane 0.2 mol%
Carbon Dioxide 0.3 mol%
Carbon Monoxide 0.3 mol%
Nitrogen 2.7 mol%
H(2)S 20 ppmv (min.)
40 ppmv (avg.)
80 ppmv (max.)
Min. Normal Max.
---- ------ ----
Pressure 50 psig 55 psig 80 psig
Temperature 56(degrees)F 71(degrees)F 104(degrees)F
HHV (Btu/SCF) 600 900 1,250
LHV (Btu/SCF) 774
Flow Rates
(MMBtu/hr,HHV) 143 228 461
The mechanical design pressure and temperature will be 105 psig and
150(degrees)F. A billing quality meter will be provided by Seller.
11.0 Hydrotreater Spill Stream
A single, combined spill stream from Xxxxx'x hydrotreater units (GFU
241/242/243/244) will be sent to a separate PSA for hydrogen purification.
The spill stream composition, temperature and pressure, supplied to the
Facility's battery limits shall be:
Min. Normal Max.
--- ------ ----
H(2)O 0.10 mol% 0.18 mol% 0.23 mol%
NH(3) 1 ppmv 8 ppmv 20 ppmv
N(2) 0.00 mol% 0.31 mol% 0.79 mol%
H(2)S 40 ppmv 123 ppmv 150 ppmv
H(2) 69.47 mol% 72.33 mol% 76.75 mol%
D-5
CH(4) 12.00 mol% 15.15 mol% 18.00 mol%
C(2)H(6) 5.00 mol% 7.09 mol% 10.00 mol%
C(3)H(8) 2.00 mol% 3.46 mol% 4.00 mol%
n-C(4)H(10) 0.50 mol% 0.90 mol% 1.50 mol%
i-C(5)H(12) 0.03 mol% 0.28 mol% 0.49 mol%
n-C(5)H(12) 0.03 mol% 0.28 mol% 0.49 mol%
n-C(6)H(12) 0.01 mol% 0.01 mol% 0.02 mol%
Based on the normal composition shown above, the process design spill
stream feed flow, pressure and temperature at the Facility's battery
limits will be:
Min. Normal Max.
--- ------ ----
Flow 4.2 MMSCFD 8.9 MMSCFD 11.7 MMSCFD
Pressure 350 psig 425 psig 600 psig
Temperature 56(degrees)F 71(degrees)F 104(degrees)F
The mechanical design pressure and maximum temperature will be 720
psig and 120(degrees)F.
Seller reserves the right to install analytical equipment to verify
composition of the spill stream feed. Feed stream composition components
in excess of the maximum values listed will prematurely degrade the PSA
sieve material. Seller reserves the right to invoice Xxxxx for cost of
sieve replacement in this event.
A process flow meter supplied by Seller shall be used for spill stream
feed to establish and monitor cycle times. A process meter will be
supplied by Seller for both product hydrogen and purge gas from this
system.
12.0 Other Services
12.1 Xxxxx shall provide access to its existing construction parking.
12.2 Xxxxx shall provide temporary power, 750 kVA capacity, one
distribution panel board with eight 100 amp, 480V, 3 phase circuit
breakers at the southwest corner of the Facility site during
construction of the Facility. Xxxxx shall also provide potable water
and hydrotest water to the site during construction.
12.3 Xxxxx shall provide its normal 24-hour security for the Facility
during construction as part of Xxxxx'x normal refinery security. Any
additional security shall be provided by Seller.
12.4 Xxxxx shall provide two areas (320' x 500' south of Buyer's tank 78
and 250' x 340' east of Xxxxx'x tank 1802) for temporary storage and
material laydown.
PROJECT MILESTONE SCHEDULE
Sellers obligations under Section 2.2 hereunder are predicated on Xxxxx
completing certain tasks in accordance with the following milestone schedule.
MILESTONE DATE REQUIRED
Utilities per Exhibit D made available to the Facility:
-------------------------------------------------------
Firewater 25 May 2000
Refinery Fuel Gas 23 August 2000
Spill Gas Feed 23 August 2000
D-6
MILESTONE DATE REQUIRED
Utilities per Exhibit D made available to the Facility:
-------------------------------------------------------
Plant Air 15 April 2000
Permanent 13.8kV Power 30 May 2000
Filtered Water 15 April 2000
Boiler Feed Water (less than 500 gpm rate) 15 April 2000
Boiler Feed Water (full rate) 23 August 2000
Nitrogen 01 May 2000
Wastewater Service (Dirty and Sour Water) 15 April 2000
Cooling Water 01 May 2000
Steam Line Complete/Available to battery limit 06 September 2000
Spill Gas Purge Gas to Fuel Line 23 August 2000
Product Hydrogen Line Complete/Available to battery limits 23 August 2000
Seller shall invoice Buyer for the Utilities hereunder monthly for the previous
month's consumption of such Utilities based on the prices shown below. Such
Utilities are being billed to Seller by Xxxxx under the Product Supply Agreement
and are being rebilled by Seller to Buyer hereunder. Seller shall pay Xxxxx for
the Utilities as and when the costs and expenses for such Utilities are paid to
Seller by Buyer. Xxxxx shall install metering equipment as necessary to
determine the quantities delivered to Seller each month during the Supply
Period.
Prices for the above utilities are as follows:
Cooling Water: $0.05 per 1000 gallons
Boiler Feed Water Make-up: $1.50 per 1000 gallons
Filtered Water: $0.75 per 1000 gallons
Potable Water: $1.50 per 1000 gallons
Nitrogen: Equal to the average price Buyer pays for purchase
from third parties.
Plant Air: $0.16 per MSCF
Wastewater
(Dirty water treating): $3.08 per 1000 gallons
Refinery Fuel Gas: Reference Section 6 of the Agreement.
The basis of the above prices is 1 January 1998. During the Supply Period these
prices shall be adjusted as of 1 January each calendar year at a fixed rate of
2% per year.
D-7
EXHIBIT E
DELIVERY POINTS
1. The electrical delivery metering points are shown below:
Xxxxx Refining
Electrical Distribution
System
[Diagram Omitted from Electronic Filing]
E-1
2. Pipeline Delivery Points [insert KTI Dwg. No. 36914.01N-A-26-002, shts 1-5]
[Diagrams Omitted from Electronic Filing]
E-2
EXHIBIT F
FACILITY PERFORMANCE CAPABILITIES
Performance figures based on:
1. Average ambient temperature
2. Gas turbine average degradation
3. Gas turbine at full output
======================================
SMR H(2) Production Export Steam Rate
MMSCFD pounds per hour
--------------------------------------
100 440,000
--------------------------------------
75 369,000
--------------------------------------
60 324,600
--------------------------------------
40 257,800
--------------------------------------
Performance figures based on:
1. Average ambient
2. Gas turbine off
======================================
SMR H(2) Production Export Steam Rate
MMSCFD pounds per hour
--------------------------------------
100 398,200
--------------------------------------
F-1
EXHIBIT G
GAS TURBINE PLANNED MAINTENANCE SCHEDULE
The anticipated planned maintenance schedule for the gas turbine generator is as
shown below.
Event Hrs/Event Events/6yrs. Total
--------------------------------------------------------
Water Wash 24 18 432
8000 Hr. Inspection 192 4 768
24000 Hr. Inspection 336 1 336
48000 Hr. Inspection 504 1 504
G-1
EXHIBIT H
HYDROGEN ON-STREAM FACTOR EXAMPLE
Reconciliation at the end of Contract Year 2:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 1 97% (88)
Year 2 98% 0
Penalty Total = (88) x $5200/hr = ($457,600)
Reconciliation at the end of Contract Year 3:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 2 98% 0
Year 3 98.5% 44
Bonus Total = 44 x $5200/hr = ($228,000)
Reconciliation at the end of Contract Year 4:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 3 98.5% 44
Year 4 99% 88
Bonus Total = 132 x $5200/hr = ($686,400)
Reconciliation at the end of Contract Year 5:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 4 99% 88
Year 5 96% (176)
Penalty Total = (88) x $5200/hr = ($457,600)
Reconciliation at the end of Contract Year 6:
On Stream % Bonus Hours/Liquidated Damage Hours
----------- -----------------------------------
Year 5 96% (176)
Year 6 98.3% 26
Penalty Total = (150) x $5200/hr = ($780,000)
H-1
EXHIBIT I
REFINERY FUEL GAS VOLUME ADJUSTMENT
Refinery fuel gas volumes shall be determined monthly and adjusted in accordance
with the following calculation:
RFa = RFu x [(LHVrf/HHVrf)/(LHVng/HHVng)]
Where:
RFa = Adjusted refinery fuel gas volume for billing month n MMBtu, HHV
RFu = Refinery fuel gas volume for billing month n MMBtu, HHV
LHVrf = LHV for the refinery off-gas used for fuel Btu/SCF
HHVrf = HHV for the refinery off gas used for fuel Btu/SCF
LHVng = LHV of natural gas Btu/SCF
HHVng = HHV of natural gas Btu/SCF
LHVrf and HHVrf shall be as calculated monthly by Buyer based on averaging
Buyer's weekly gas chromatograph-based determination of the refinery fuel
heating values. LHVng and HHVng shall be calculated by averaging the daily gas
chromatograph analysis of the natural gas as provided monthly by the supplier(s)
of natural gas. The quantity of BTU's purchased by Seller from Xxxxx shall be
determined by Seller's metering and densitometer on a BTU/month, HHV basis.
I-1
EXHIBIT J
BASE FACILITY CHARGE PREPAYMENT SCHEDULE
Upon giving Seller twelve (12) months notice, Buyer may elect to prepay the
capital related portion of the Base Facility Charge set forth in Section 7.1 in
accordance with the following schedule. Following such prepayment the revised,
continuing Base Facility shall be the then current variable portion of the Base
Facility Charge as determined in Section 8.1.
============================
Hydrogen
Yrs. Compression
Remaining in Prepayment
Supply Period Amount
----------------------------
10 5,058,000
----------------------------
9 4,676,000
----------------------------
8 4,271,000
----------------------------
7 3,841,000
----------------------------
6 3,384,000
----------------------------
5 2,900,000
----------------------------
4 2,387,000
----------------------------
3 1,842,000
----------------------------
2 1,264,000
----------------------------
1 651,000
============================
J-1
EXHIBIT K
SITE HYDROGEN BALANCES
[Insert here copy of Xxxxx 4/14/99]
[H(2) balances spreadsheet]
PORT XXXXXX REFINERY
XXXX PROJECT
HYDROGEN BALANCE (100% BASIS)
--------------------------------------------------------------------------------------------------------------------------
XXXX SPV XXXX SPV XXXX SPV
APRIL 1999 BASE MAX 2ND STAGE HCU MAX DISTILLATE HDS
--------------------------- --------------------------- -----------------------------
CHARGE CHARGE CHARGE
B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl
--------------------------------------------------------------------------------------------------------------------------
REFINERY SYSTEM
--------------------------------------------------------------------------------------------------------------------------
585 PSIG
--------------------------------------------------------------------------------------------------------------------------
Producers
--------------------------------------------------------------------------------------------------------------------------
CCR 1344 51,000 60.9 1,193 51,000 60.9 1,193 51,000 60.9 1,193
--------------------------------------------------------------------------------------------------------------------------
C 2 A&B 52.0 52.0 52.0
--------------------------------------------------------------------------------------------------------------------------
1743 Spill -- -- --
--------------------------------------------------------------------------------------------------------------------------
1344 Spill -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total Compressed 52.0 52.0 52.0
--------------------------------------------------------------------------------------------------------------------------
4544 -- -- --
--------------------------------------------------------------------------------------------------------------------------
000 XXX XXXXX 5.0 5.0 5.0
--------------------------------------------------------------------------------------------------------------------------
H(2)P/L -- -- --
--------------------------------------------------------------------------------------------------------------------------
57.0 57.0 57.0
--------------------------------------------------------------------------------------------------------------------------
HIGH PURITY SPILL 19.0 19.0 26.7
--------------------------------------------------------------------------------------------------------------------------
TOTAL 76.0 76.0 83.7
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Consumers
--------------------------------------------------------------------------------------------------------------------------
GFU 241 24,000 8.5 356 24,000 8.5 356 24,000 8.5 356
--------------------------------------------------------------------------------------------------------------------------
GFU 242 31,272 3.7 119 31,272 3.7 119 31,272 3.7 119
--------------------------------------------------------------------------------------------------------------------------
GFU 243 33,262 17.0 512 33,262 17.0 512 43,000 24.7 575
--------------------------------------------------------------------------------------------------------------------------
FCCICO -- -- 792 -- -- 792 9,738 -- 792
--------------------------------------------------------------------------------------------------------------------------
XXXXX LGO 24,554 -- 527 24,554 -- 527 24,554 -- 527
--------------------------------------------------------------------------------------------------------------------------
SR DIESEL 8,708 -- 469 8,708 -- 469 8,708 -- 469
--------------------------------------------------------------------------------------------------------------------------
GFU 244 65,000 27.0 415 65,000 27.0 415 65,000 27.0 415
--------------------------------------------------------------------------------------------------------------------------
HFAU 443 [alkylate] 0.5 0.5 0.5
--------------------------------------------------------------------------------------------------------------------------
SRU 543 [tons S] 0.4 0.4 0.4
--------------------------------------------------------------------------------------------------------------------------
SRU 544 [tons S] 0.8 0.8 0.8
--------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
--------------------------------------------------------------------------------------------------------------------------
XXX 0000 51,768 17.3 335 51,768 17.3 335 51,768 17.3 335
--------------------------------------------------------------------------------------------------------------------------
SR NAPHTHA 39,483 -- 47 39,483 -- 47 39,483 -- 47
--------------------------------------------------------------------------------------------------------------------------
99.3 107.0
--------------------------------------------------------------------------------------------------------------------------
XXXXX NAPHTHA 12,285 -- 519 12,285 -- 519 12,285 -- 519
--------------------------------------------------------------------------------------------------------------------------
76.0 76.0 83.7
--------------------------------------------------------------------------------------------------------------------------
HYDROCRACKER SYSTEM 850 PSIG
--------------------------------------------------------------------------------------------------------------------------
Producers
--------------------------------------------------------------------------------------------------------------------------
SMR 94.7 99.3 107.0
--------------------------------------------------------------------------------------------------------------------------
H(2)P/L -- -- --
--------------------------------------------------------------------------------------------------------------------------
1544 --
--------------------------------------------------------------------------------------------------------------------------
HGS -- -- --
--------------------------------------------------------------------------------------------------------------------------
HT PSA 5.1 5.1 5.1
--------------------------------------------------------------------------------------------------------------------------
99.8 104.4 112.1
--------------------------------------------------------------------------------------------------------------------------
Consumers
--------------------------------------------------------------------------------------------------------------------------
942 35,000 74.2 2,120 35,000 78.8 2,251 35,000 78.8 2,251
--------------------------------------------------------------------------------------------------------------------------
VGO 6,162 10.1 1,641 6,162 10.1 1,641 6,162 10.1 1,641
--------------------------------------------------------------------------------------------------------------------------
DCU GAS OIL 19,444 34.9 1,794 19,444 34.9 1,794 19,444 34.9 1,794
--------------------------------------------------------------------------------------------------------------------------
FCC LCO 9,394 19.5 2,074 9,394 19.5 2,074 9,394 19.5 2,074
--------------------------------------------------------------------------------------------------------------------------
2ND STAGE 10,217 9.7 953 15,000 14.3 953 15,000 14.3 953
--------------------------------------------------------------------------------------------------------------------------
HGS 19.0 19.0 26.7
--------------------------------------------------------------------------------------------------------------------------
000 XXX XXXXX 5.0 5.0 5.0
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
843 NHT CONSUMED 12,285 1.0 79 12,285 1.0 79 12,285 1.0 79
--------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
--------------------------------------------------------------------------------------------------------------------------
99.8 104.4 112.1
--------------------------------------------------------------------------------------------------------------------------
Total Prod 175.8 180.4 195.8
--------------------------------------------------------------------------------------------------------------------------
Total Consumer 175.8 180.4 195.8
--------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
XXXX SPV XXXX SPV XXXX SPV
CCR COMPRESSOR CCR/CYCLO COMPRESSOR REFORMER @MAX
--------------------------- ------------------------------ ------------------------------
CHARGE CHARGE CHARGE
B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl B/SD MMSCFCD SCF/Bbl
----------------------------------------------------------------------------------------------------------------------------------
REFINERY SYSTEM
----------------------------------------------------------------------------------------------------------------------------------
585 PSIG
----------------------------------------------------------------------------------------------------------------------------------
Producers
----------------------------------------------------------------------------------------------------------------------------------
CCR 1344 51,000 60.9 1,193 51,000 60.9 1,193 56,000 66.8 1,193
----------------------------------------------------------------------------------------------------------------------------------
C 2 A&B 52.0 52.0 52.0
----------------------------------------------------------------------------------------------------------------------------------
1743 Spill -- 12.8 12.8
----------------------------------------------------------------------------------------------------------------------------------
1344 Spill 8.9 8.9 14.8
----------------------------------------------------------------------------------------------------------------------------------
Total Compressed 60.9 73.7 79.6
----------------------------------------------------------------------------------------------------------------------------------
4544 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
000 XXX XXXXX 5.0 5.0 5.0
----------------------------------------------------------------------------------------------------------------------------------
H2P/L -- -- --
----------------------------------------------------------------------------------------------------------------------------------
65.9 78.7 84.6
----------------------------------------------------------------------------------------------------------------------------------
HIGH PURITY SPILL 17.8 5.0 0.2
----------------------------------------------------------------------------------------------------------------------------------
TOTAL 83.7 83.7 84.8
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Cosumers
----------------------------------------------------------------------------------------------------------------------------------
GFU 241 24,000 8.5 356 24,000 8.5 356 2,400 8.5 356
----------------------------------------------------------------------------------------------------------------------------------
GFU 242 31,272 3.7 119 31,272 3.7 119 31,272 3.7 119
----------------------------------------------------------------------------------------------------------------------------------
GFU 243 43,000 24.7 575 43,000 24.7 575 43,000 24.7 575
----------------------------------------------------------------------------------------------------------------------------------
FCCICO 9,738 -- 792 9,738 -- 792 9,738 -- 792
----------------------------------------------------------------------------------------------------------------------------------
XXXXX LGO 24,554 -- 527 24,554 -- 527 24,554 -- 527
----------------------------------------------------------------------------------------------------------------------------------
SR DIESEL 8,708 -- 469 8,708 -- 469 8,708 -- 469
----------------------------------------------------------------------------------------------------------------------------------
GFU 244 65,000 27.0 415 65,000 27.0 415 65,000 27.0 415
----------------------------------------------------------------------------------------------------------------------------
HFAU 443 [alkylate] 0.5 0.5 0.5
----------------------------------------------------------------------------------------------------------------------------------
SRU 543 [tons S] 0.4 0.4 0.4
----------------------------------------------------------------------------------------------------------------------------------
SRU 544 [tons S] 0.8 0.8 0.8
----------------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
----------------------------------------------------------------------------------------------------------------------------------
XXX 0000 51,768 17.3 335 51,768 17.3 335 56,843 18.5 325
----------------------------------------------------------------------------------------------------------------------------------
SR NAPHTHA 39,483 -- 47 39,483 -- 47 44,558 -- 47
----------------------------------------------------------------------------------------------------------------------------------
XXXXX NAPHTHA 12,285 -- 519 12,285 -- 519 12,285 -- 519
----------------------------------------------------------------------------------------------------------------------------------
83.7 83.7 84.8
----------------------------------------------------------------------------------------------------------------------------------
HYDROCRACKER SYSTEM 850 PSIG
----------------------------------------------------------------------------------------------------------------------------------
Producers
----------------------------------------------------------------------------------------------------------------------------------
SMR 90.1 85.3 80.5
----------------------------------------------------------------------------------------------------------------------------------
H2P/L -- -- --
----------------------------------------------------------------------------------------------------------------------------------
1544 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
HGS -- -- --
----------------------------------------------------------------------------------------------------------------------------------
HT PSA 5.1 5.1 5.1
----------------------------------------------------------------------------------------------------------------------------------
103.2 90.4 85.6
----------------------------------------------------------------------------------------------------------------------------------
Consumers
----------------------------------------------------------------------------------------------------------------------------------
942 35,000 78.8 2,251 35,000 78.8 2,251 35,000 78.8 2,251
----------------------------------------------------------------------------------------------------------------------------------
VGO 6,162 10.1 1,641 6,162 10.1 1,641 6,162 10.1 1,641
----------------------------------------------------------------------------------------------------------------------------------
DCU GAS OIL 19,444 34.9 1,794 19,444 34.9 1,794 19,444 34.9 1,794
----------------------------------------------------------------------------------------------------------------------------------
FCC LCO 9,394 19.5 2,074 9,394 19.5 2,074 9,394 19.5 2,074
----------------------------------------------------------------------------------------------------------------------------------
2ND STAGE 15,000 14.3 953 15,000 14.3 953 15,100 14.3 953
----------------------------------------------------------------------------------------------------------------------------------
HGS 17.8 5.0 0.2
----------------------------------------------------------------------------------------------------------------------------------
000 XXX XXXXX 5.0 5.0 5.0
----------------------------------------------------------------------------------------------------------------------------------
843 NHT CONSUMED 12,285 1.0 79 12,285 1.0 79 12,285 1.0 79
----------------------------------------------------------------------------------------------------------------------------------
SRU 545 [tons S] 0.7 0.7 0.7
----------------------------------------------------------------------------------------------------------------------------------
103.2 90.4 85.6
----------------------------------------------------------------------------------------------------------------------------------
Total Prod 186.9 174.1 170.4
----------------------------------------------------------------------------------------------------------------------------------
Total Consumer 186.9 174.1 170.4
----------------------------------------------------------------------------------------------------------------------------------
-------------------------------
XXXX SPV
1544 HYDROGEN
-------------------------------
CHARGE
B/SD MMSCFCD SCF/Bbl
----------------------------------------------------------------
REFINERY SYSTEM
----------------------------------------------------------------
585 PSIG
----------------------------------------------------------------
Producers
----------------------------------------------------------------
CCR 1344 56,000 66.8 1,193
----------------------------------------------------------------
C 2 A&B 52.0
----------------------------------------------------------------
1743 Spill 12.8
----------------------------------------------------------------
1344 Spill 14.8
----------------------------------------------------------------
Total Compressed 79.6
----------------------------------------------------------------
4544 --
----------------------------------------------------------------
000 XXX XXXXX 5.0
----------------------------------------------------------------
H(2)P/L 84.6
----------------------------------------------------------------
--
----------------------------------------------------------------
HIGH PURITY SPILL 0.2
----------------------------------------------------------------
TOTAL 84.8
----------------------------------------------------------------
----------------------------------------------------------------
Consumers
----------------------------------------------------------------
GFU 241 24,000 8.5 356
----------------------------------------------------------------
GFU 242 31,272 3.7 119
----------------------------------------------------------------
GFU 243 43,000 24.7 575
----------------------------------------------------------------
FCCICO 9,738 -- 792
----------------------------------------------------------------
XXXXX LGO 24,554 -- 527
----------------------------------------------------------------
SR DIESEL 8,708 -- 469
----------------------------------------------------------------
GFU 244 65,000 27.0 415
----------------------------------------------------------------
HFAU 443 [alkylate] 0.5
----------------------------------------------------------------
SRU 543 [tons S] 0.4
----------------------------------------------------------------
SRU 544 [tons S] 0.8
----------------------------------------------------------------
SRU 545 [tons S] 0.7
----------------------------------------------------------------
XXX 0000 56,843 18.5 325
----------------------------------------------------------------
SR NAPHTHA 44,558 -- 47
----------------------------------------------------------------
XXXXX NAPHTHA 12,285 -- 518
----------------------------------------------------------------
84.8
----------------------------------------------------------------
HYDROCRACKER SYSTEM 850 PSIG
----------------------------------------------------------------
Producers
----------------------------------------------------------------
SMR 71.3
----------------------------------------------------------------
H2P/L --
----------------------------------------------------------------
1544 9.2
----------------------------------------------------------------
HGS --
----------------------------------------------------------------
HT PSA 5.1
----------------------------------------------------------------
85.6
----------------------------------------------------------------
Consumers
----------------------------------------------------------------
942 35,000 78.8 2,251
----------------------------------------------------------------
VGO 6,162 10.1 1,641
----------------------------------------------------------------
DCU GAS OIL 19,444 34.9 1,794
----------------------------------------------------------------
FCC LCO 9,394 19.5 2,074
----------------------------------------------------------------
2ND STAGE 15,000 14.3 953
----------------------------------------------------------------
HGS 0.2
----------------------------------------------------------------
000 XXX XXXXX 5.0
----------------------------------------------------------------
843 NHT CONSUMED 12,825 1.0 79
----------------------------------------------------------------
SRU 545 [tons S] 0.7
----------------------------------------------------------------
85.6
----------------------------------------------------------------
Total Prod 170.4
----------------------------------------------------------------
Total Consumer 170.4
----------------------------------------------------------------